Exhibit 10.1

Final Execution Version

MASTER AGREEMENT

Between

Health Net, Inc.

and

International Business Machines Corporation

Dated

August 19, 2008

The mark *** indicates that text has been redacted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended, and filed separately with Securities and Exchange Commission.

 

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TABLE OF CONTENTS

 

1.        PREAMBLE

   1

1.1

   BACKGROUND AND PURPOSE    1

1.2

   OBJECTIVES    1

1.3

   STRUCTURE OF AGREEMENT    2

1.4

   CONSTRUCTION OF PREAMBLE    5

2.        DEFINITIONS

   5

2.1

   DEFINED TERMS    5

2.2

   OTHER TERMS    9

3.        SERVICES

   9

3.1

   PROVISION OF SERVICES DURING TRANSITION    9

3.2

   PROVISION OF THE STEADY-STATE SERVICES    9

3.3

   IMPLIED SERVICES    10

3.4

   EVOLUTION OF THE SERVICES    10

3.5

   USERS OF THE SERVICES    10

3.6

   SERVICES NOT EXCLUSIVE; VARIABLE    11

3.7

   COOPERATION AND COORDINATION WITH OTHER PARTIES    11

3.8

   NEW SERVICES    12

4.        TERM AND REGULATORY APPROVALS

   12

4.1

   INITIAL TERM    12

4.2

   RENEWAL TERMS    12

4.3

   REGULATORY APPROVALS AND FEDERAL BUSINESS    12

5.        PERFORMANCE

   13

5.1

   PERFORMANCE, GENERALLY    13

5.2

   PLACE OF PERFORMANCE    13

5.3

   TIME OF PERFORMANCE    13

5.4

   MANNER OF PERFORMANCE    14

5.5

   QUALITY ASSURANCE AND CONTINUOUS IMPROVEMENT    15

5.6

   USER SATISFACTION    15

6.        SERVICE LEVELS

   15

6.1

   GENERAL    15

6.2

   FAILURE TO PERFORM    15

7.        SUPPLIER PERSONNEL

   16

7.1

   PROVISION OF SUITABLE PERSONNEL    16

7.2

   SCREENING AND BACKGROUND CHECKS    16

7.3

   RESPONSIBILITY FOR SUPPLIER PERSONNEL, GENERALLY    17

7.4

   KEY SUPPLIER POSITIONS    17

7.5

   REMOVAL AND REPLACEMENT OF SUPPLIER PERSONNEL    18

7.6

   CONTROLLING TURNOVER OF SUPPLIER PERSONNEL    18

7.7

   SUBCONTRACTING    18

7.8

   MANAGED THIRD PARTIES    19

8.        HEALTH NET RESPONSIBILITIES

   20

8.1

   APPOINTMENT OF HEALTH NET PROGRAM MANAGEMENT OFFICE (PMO) PERSONNEL    20

8.2

   HEALTH NET COOPERATION DUTIES    20

8.3

   SAVINGS CLAUSE    20

 

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9.        CHARGES

   20

9.1

   PASS-THROUGH EXPENSES    21

9.2

   INCIDENTAL EXPENSES    22

9.3

   TAXES    22

9.4

   BENCHMARKING    24

10.        INVOICING AND PAYMENT

   29

10.1

   INVOICING    29

10.2

   PAYMENT DUE    30

10.3

   ACCOUNTABILITY    31

10.4

   PRORATION    31

10.5

   REFUNDABLE ITEMS    31

10.6

   DEDUCTIONS    31

10.7

   DISPUTED CHARGES    31

11.        TRANSFER OR USE OF RESOURCES

   32

11.2

   TRANSFER OF PERSONNEL    32

11.3

   HEALTH NET OWNED EQUIPMENT    32

11.4

   HEALTH NET LEASED EQUIPMENT    33

11.5

   HEALTH NET THIRD PARTY SERVICE CONTRACTS    34

11.6

   HEALTH NET OWNED SOFTWARE    34

11.7

   HEALTH NET LICENSED SOFTWARE    35

11.8

   INTENTIONALLY OMITTED    36

11.9

   HEALTH NET FACILITIES    36

11.10

   TERMS APPLICABLE TO HEALTH NET FACILITIES, GENERALLY    36

11.11

   REQUIRED CONSENTS    38

11.12

   HEALTH NET RESOURCES PROVIDED TO SUPPLIER PERSONNEL WORKING ON-SITE    38

12.        RESOURCE ACQUISITIONS DURING THE TERM

   39

12.1

   GENERAL RESPONSIBILITY AND COMPATIBILITY    39

12.2

   EQUIPMENT    39

12.3

   THIRD PARTY SERVICES    40

12.4

   SOFTWARE    40

12.5

   NETWORK CONNECTIVITY    41

12.6

   HEALTH NET APPROVAL OF CERTAIN RESOURCE ACQUISITIONS    41

12.7

   HEALTH NET RIGHTS TO CERTAIN SOFTWARE UPON TERMINATION/EXPIRATION    42

13.        TRANSITION AND TRANSFORMATION

   46

13.1

   “TRANSITION” DEFINED    46

13.2

   SUPPLIER SOLUTION DESCRIPTION AND TRANSITION PLAN    46

13.3

   CONDUCT OF THE TRANSITION AND TRANSFORMATION    47

13.4

   HEALTH NET COOPERATION AND SUPPORT    47

13.5

   COMPLETION OF TRANSITION AND TRANSFORMATION    47

14.        DATA SECURITY AND PROTECTION

   48

14.1

   “HEALTH NET DATA” DEFINED    48

14.2

   HEALTH NET DATA, GENERALLY    48

14.3

   DATA SECURITY    48

14.4

   COMPLIANCE WITH DATA PRIVACY AND DATA PROTECTION LAWS, REGULATIONS AND
POLICIES    49

14.5

   IMPORT/EXPORT CONTROLS    50

14.6

   COMPLIANCE WITH GRAMM-LEACH-BLILEY (“GLB ACT”)    50

15.        INTELLECTUAL PROPERTY RIGHTS

   51

15.1

   DEFINED TERMS    51

 

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15.2

   INDEPENDENT IP    51

15.3

   DEVELOPED MATERIALS    52

15.4

   INTELLECTUAL PROPERTY RIGHTS AGREEMENTS WITH SUPPLIER PERSONNEL    53

15.5

   OTHER OBLIGATIONS AND RIGHTS REGARDING WORK PRODUCT    53

15.6

   MENTAL IMPRESSIONS    53

16.        TERMINATION

   54

16.1

   TERMINATION BY HEALTH NET    54

16.2

   TERMINATION DUE TO ADVERSE CHANGES IN SUPPLIER’S FINANCIAL CIRCUMSTANCES   
56

16.3

   TERMINATION BY SUPPLIER    56

16.4

   EXTENSION OF TERMINATION/EXPIRATION DATE    57

16.5

   PARTIAL TERMINATION    57

16.6

   DISENGAGEMENT ASSISTANCE    57

16.7

   SURVIVAL    59

16.8

   BID ASSISTANCE    60

16.9

   TERMINATION OF THE CROSS TOWER SERVICES OR THE NETWORK SERVICES TOWERS    60

17.        GOVERNANCE AND MANAGEMENT

   61

17.1

   GOVERNANCE STRUCTURE AND PROCESSES    61

17.2

   MEETINGS    61

17.3

   REPORTS    62

17.4

   PROCEDURES MANUAL    62

17.5

   CHANGE CONTROL    63

17.6

   ANNUAL TECHNOLOGY PLAN    64

18.        AUDITS AND RECORDS

   65

18.1

   AUDIT RIGHTS    65

18.2

   AUDIT FOLLOW-UP    66

18.3

   CONFIDENTIALITY OF AUDITS    66

18.4

   RECORDS RETENTION    66

18.5

   SUPPLIER AUDITS    67

18.6

   FINANCIAL REPORTS    68

18.7

   OVERCHARGES    68

19.        REPRESENTATIONS, WARRANTIES AND COVENANTS OF SUPPLIER

   68

19.1

   WORK STANDARDS    68

19.2

   MAINTENANCE    69

19.3

   EFFICIENCY AND COST-EFFECTIVENESS    69

19.4

   TECHNOLOGY    69

19.5

   DELIVERABLES    69

19.6

   DOCUMENTATION    69

19.7

   COMPATIBILITY    70

19.8

   NON-INFRINGEMENT    70

19.9

   VIRUSES    71

19.10

   DISABLING CODE    71

19.11

   COMPLIANCE WITH HEALTH NET POLICIES AND PROCEDURES    71

19.12

   COMPLIANCE WITH LAWS; EXPORT CONTROL    71

19.13

   CORPORATE SOCIAL RESPONSIBILITY    71

19.14

   SUBCONTRACTOR CONFIDENTIALITY AND ASSIGNMENT    72

19.15

   NO IMPROPER INDUCEMENTS    72

20.        MUTUAL REPRESENTATIONS AND WARRANTIES; DISCLAIMER

   72

20.1

   MUTUAL REPRESENTATIONS AND WARRANTIES    72

21.        CONFIDENTIALITY

   73

 

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21.1

   “CONFIDENTIAL INFORMATION” DEFINED    73

21.2

   OBLIGATIONS OF CONFIDENTIALITY    74

21.3

   NO IMPLIED RIGHTS    75

21.4

   COMPELLED DISCLOSURE    75

21.5

   CONFIDENTIAL TREATMENT OF THIS AGREEMENT    75

21.6

   DISCLOSURE OF INFORMATION CONCERNING TAX TREATMENT    75

21.7

   RETURN OR DESTRUCTION    75

21.8

   DURATION OF CONFIDENTIALITY OBLIGATIONS    76

22.        INSURANCE

   76

23.        INDEMNIFICATION

   76

23.1

   “CLAIM” AND “LOSSES” DEFINED    76

23.2

   INDEMNIFICATION BY SUPPLIER    77

23.3

   INFRINGEMENT CLAIMS    78

23.4

   INDEMNIFICATION BY HEALTH NET    78

23.5

   INDEMNIFICATION PROCEDURES    79

23.6

   SUBROGATION    80

24.        LIABILITY

   80

24.1

   GENERAL INTENT    80

24.2

   LIMITATIONS OF LIABILITY    80

24.3

   FORCE MAJEURE    82

25.        RULES OF CONSTRUCTION

   83

25.1

   ENTIRE AGREEMENT    83

25.2

   CONTRACTING PARTIES; NO THIRD PARTY BENEFICIARIES    83

25.3

   CONTRACT AMENDMENTS AND MODIFICATIONS    84

25.4

   GOVERNING LAW    84

25.5

   RELATIONSHIP OF THE PARTIES    84

25.6

   CONSENTS AND APPROVALS    84

25.7

   WAIVER    84

25.8

   REMEDIES CUMULATIVE    84

25.9

   REFERENCES    85

25.10

   RULES OF INTERPRETATION    85

25.11

   ORDER OF PRECEDENCE    85

25.12

   SEVERABILITY    85

25.13

   COUNTERPARTS    86

25.14

   READING DOWN    86

26.        DISPUTE RESOLUTION

   86

26.1

   INFORMAL DISPUTE RESOLUTION    86

26.2

   LITIGATION    87

26.3

   CONTINUED PERFORMANCE    87

26.4

   EQUITABLE REMEDIES    87

26.5

   WAIVER OF JURY TRIAL    87

26.6

   DISCLAIMER OF UNIFORM COMPUTER INFORMATION TRANSACTIONS ACT    88

27.        GENERAL

   88

27.1

   BINDING NATURE AND ASSIGNMENT    88

27.2

   NONDISCRIMINATION    89

27.3

   NOTICES    89

27.4

   NON-SOLICITATION OF EMPLOYEES    90

27.5

   LEGAL COMPLIANCE    90

27.6

   COVENANT OF GOOD FAITH    90

 

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27.7

   PUBLIC DISCLOSURES    90

27.8

   SERVICE MARKS    91

27.9

   MUTUALLY NEGOTIATED    92

 

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Master Agreement

This Master Agreement, effective as of August 19, 2008 (the “Effective Date”),
is entered into by and between Health Net, Inc. (“Health Net”), a Delaware
corporation with its principal place of business located at 21650 Oxnard Street,
Woodland Hills, CA 91367 and International Business Machines Corporation (“IBM”
or “Supplier”), a New York corporation with a place of business located at Route
100, Somers, NY 10589, U.S.A. (each, a “Party” and collectively, the “Parties”).
The Parties agree that the following terms and conditions shall apply to the
services to be provided by IBM to Health Net under this Agreement, in
consideration of certain payments to be made by Health Net, all as more
specifically described below.

 

1. PREAMBLE

 

  1.1 Background and Purpose

This Agreement is made and entered into with reference to the following:

 

  (a) Health Net is among the nation’s largest publicly traded managed health
care companies. Its mission is to help people be healthy, secure and
comfortable. The company’s health plans and government contracts subsidiaries
provide health benefits to approximately 6.7 million individuals across the
country through group, individual, Medicare, Medicaid and TRICARE and Veterans
Affairs programs.

 

  (b) Supplier has acknowledged that Supplier is a leading provider of
outsourcing services and have the skills, qualifications and experience
necessary to perform and manage the information technology and telecomunications
services required by Health Net under the framework of this Agreement in an
efficient and controlled manner, with a high degree of quality and
responsiveness resulting in the consolidation, rationalization and
standardization of Health Net’s information technology and telecommunications
infrastructure services.

 

  (c) Supplier specializes, amongst other things, in performing for others the
types of services contemplated to be performed under the framework of this
Agreement. Supplier acknowledges that it is skilled and experienced in providing
similar services for others.

 

  (d) After a comprehensive evaluation and negotiation process, Health Net has
selected Supplier to provide the Services during the Term of the Agreement, and
Supplier desires to provide to Health Net the Services through the execution of
this Agreement and the attached schedules, exhibits and appendices, all of which
are governed by the terms and conditions set forth in this Agreement.

 

  1.2 Objectives

 

  (a) Health Net and Supplier have agreed upon the following over-arching goals
and objectives as those they expect to be accomplished by their execution of
this Agreement and the performance of Services entered into pursuant to the
Agreement:

 

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  (i) A seamless transition of outsourced services to Supplier from Health Net
and incumbent vendors in a manner that will minimize business disruption and
business risk to Health Net;

 

  (ii) A service delivery environment that is scalable and responsive to change;

 

  (iii) Quality of service consistent with that of the world’s leading providers
of similar services and continuous improvement;

 

  (iv) A service delivery environment and Services that keep pace with
modernization and consumerization of technology;

 

  (v) Lighter, simpler, and effective IT solutions;

 

  (vi) Supplier accountability for integration among IT&T service providers to
Health Net and service-wide responsibility for the Services; and

 

  (vii) Services and solutions that are continuously aligned to Health Net
business needs and imperatives – i.e., a Service Delivery Environment and
platform that will support rapid scalability, growth, and change in the
composition and location of Health Net’s businesses.

 

  (b) The goals and objectives set out in this Section 1.2(a) are intended to be
a general introduction to, and statement of the spirit of, this Agreement. While
they do not expand or reduce the scope of the Parties’ express obligations under
this Agreement, Supplier’s performance under this Agreement will be measured, in
part, based on the extent to which Supplier’s performance causes or contributes
to the achievement of them. Further, to the extent that the terms of this
Agreement do not address a particular circumstance, are unclear or ambiguous, or
require the Parties to discuss, negotiate or agree on a particular matter, such
terms will be negotiated in good faith to be in accordance with, and each Party
will endeavor to act to give the fullest possible effect to, the goals and
objectives set out in this Section 1.2(a).

 

  1.3 Structure of Agreement

This document (the “General Terms and Conditions”) sets out the basic terms and
conditions under which the Parties will conduct the transactions contemplated by
this Agreement. In addition, there will be a number of Schedules and Exhibits
attached to the Terms and Conditions, including:

Schedule A (Services)

Exhibit A-1 (Equipment Refresh Plan)

Exhibit A-2 (Transition Description)

Exhibit A-3 (Solution Description)

Exhibit A-3-1 (Transformation Key Health Net Dependencies)

Exhibit A-4 (Transition & Transformation Plans)

Attachment A-4-1 (Transition Project Plan)

Attachment A-4-2 (Transformation Project Plan)

 

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Exhibit A-5 (Existing DR Contracts)

Exhibit A-6 (HNFS Requirements)

Attachment A-6-1 (HNFS Requirements Exceptions)

Exhibit A-7 (Change Control Process)

Exhibit A-8 (Citrix Enabled Applications)

Exhibit A-9 (Asset Tracking Information)

Exhibit A-10 (Project Framework)

Attachment A-10-1 (Deliverable Acceptance Procedures)

Exhibit A-11 (In Flight Projects)

Exhibit A-12 (System Decommissioning Questionnaire)

Exhibit A-13 (Facilities Services Responsibility Matrix)

Schedule B (Service Levels)

Exhibit B-1 (Service Level Metrics)

Exhibit B-2 (Formula Definitions)

Exhibit B-3 (Remedy Incident and Problem Priority Definitions)

Exhibit B-4 (Scheduled Maintenance)

Exhibit B-5 (Service Request Priority Definitions)

Schedule C (Charges)

Exhibit C-1 (Resource Units)

Exhibit C-2 (Resource Baselines)

Exhibit C-3 (Annual Service Charge)

Exhibit C-4 (ARC / RRC Rates)

Exhibit C-5 (Time & Materials Rates)

Exhibit C-6 (Pure Pass Through and Managed As Pass-Through Expenses)

Exhibit C-7 (Form Invoice)

Exhibit C-8 (Termination Charges)

Exhibit C-9 (IMAC Counting Rules)

Exhibit C-10 (Joint Verification Process)

Exhibit C-11 (ITG Budget)

Schedule D (Key Supplier Positions)

Schedule E (Transitioned Employees)

Exhibit E-1 (Affected Employees)

Exhibit E-2 (Affected Employees on Leave)

Schedule F (Health Net Facilities)

Schedule G (Governance)

Schedule H (Insurance)

Schedule I (Third Party Service Contracts)

Exhibit I-1 (Third Party Service Contracts to be Assigned to IBM)

 

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Exhibit I-2 (Third Party Service Contracts Managed In ASC)

Exhibit I-3 (Third Party Service Contracts Managed As Pass Through)

Exhibit I-4 (Third Party Service Contracts As Pure Pass Through)

Exhibit I-5 (Third Party Service Contracts to be Retained by Health Net)

Schedule J (Software)

Exhibit J-1 (Health Net Software)

Exhibit J-1-1 (Assumed)

Exhibit J-1-2 (Managed In ASC)

Exhibit J-1-3 (Managed As Pass Through Expense)

Exhibit J-1-4 (Retained)

Exhibit J-1-5 (Pure Pass Through Expense)

Exhibit J-2 (Supplier Software)

Exhibit J-2-1 (Supplier Provided Software (Commercially Available))

Exhibit J-2-2 (Supplier Provided Software (Non-Commercially Available))

Exhibit J-2-3 (Supplier Proprietary Delivery Tools)

Exhibit J-2-4 (Supplier Third Party Software used to provide the Services
(Commercially Available))

Exhibit J-2-5 (Supplier Third Party Software used to provide the Services
(Non-Commercially Available))

Exhibit J-3 (Health Net Proprietary Software)

Schedule K (Business Associate Addendum)

Schedule L (Disengagement Assistance)

Schedule M [INTENTIONALLY LEFT BLANK]

Schedule N (Equipment)

Exhibit N-1 (Health Net Owned Equipment to be Purchased by Supplier)

Exhibit N-1-1 (Desktops)

Exhibit N-1-2 (Assets from GE Profile)

Exhibit N-1-3 (Mid Range Owned Assets)

Exhibit N-1-4 (Mainframe Owned Assets)

Exhibit N-1-5 (Voice Network)

Exhibit N-1-6 (Voice Call Manager)

Exhibit N-1-7 (Video Conferencing)

Exhibit N-1-8 (iSeries)

Exhibit N-2 (Health Net Leased Equipment to be Assumed by Supplier (i.e., take
assignment and title of Asset))

Exhibit N-3 (Health Net Owned Equipment that Health Net Will Retain)

Exhibit N-4 (Health Net Leased Equipment that Health Net Will Retain)

Exhibit N-5 (Health Net Leased Equipment to be paid by Supplier and retained in
Health Net’s name)

 

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Schedule O (Policies and Procedures)

Schedule P (Approved Subcontractors)

Schedule Q (Outline of Policies and Procedures)

Schedule R [INTENTIONALLY LEFT BLANK]

Schedule S (Asset Responsibility Matrix)

Schedule T (Form Bill of Sale)

Schedule U (Glossary)

Schedule V (Supplier Competitors)

Schedule W (Reports)

Schedule X (Audits)

 

  1.4 Construction of Preamble

The provisions of this Section 1 are intended to provide a general introduction
to this Agreement and a context in which to interpret this Agreement’s terms and
conditions in circumstances where their meanings are unclear or ambiguous. It is
not intended to alter the plain meaning of this Agreement or to expand the scope
of the Parties’ express obligations under it.

 

2. DEFINITIONS

 

  2.1 Defined Terms

The following capitalized terms, when used in this Agreement, will have the
meanings given them below:

 

  (a) “Affiliate” means, with respect to an entity, any other entity or person
Controlling, Controlled by or under common Control with such entity.

 

  (b) “Agreement” shall mean the Services Agreement between Health Net and
Supplier contemplated by this Term Sheet, including its schedules, exhibits, and
appendices, as the same may be amended by the Parties from time to time in
accordance with Section 25.3.

 

  (c) “Application” or “Application Software” means Software that performs
specific End User-related data processing, data management and
telecommunications tasks.

 

  (d) “Beneficiary” means a person who has enrolled in and/or is eligible to
receive services under a Benefit Program at the time services are rendered. The
Parties acknowledge that the term “member” may be used by Health Net and for
purposes of this Agreement, the term Beneficiary includes the term “member”
wherever used.

 

  (e) “Benefit Program” means a plan offered by Health Net or its Affiliates
whereby Health Net or a Health Net Affiliate is obligated to provide or arrange
for health care services, or compensation therefor, to Beneficiaries in
accordance with the provisions contained in such plans.

 

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  (f) “Commercially Available” shall mean Software that the applicable software
vendor routinely licenses to the general public through separately established
standard terms and conditions and standard rates, and for which such software
vendor provides ongoing maintenance and updates.

 

  (g) “Commercially Reasonable Efforts” means taking all such steps and
performing in such a manner as a well managed company would undertake where it
was acting in a determined, prudent and reasonable manner to achieve a
particular desired result for its own benefit.

 

  (h) “Contract Year” means any consecutive twelve (12) month period commencing
on March 1, 2009, or any anniversary thereof during the Term. If the final
Contract Year is less than twelve (12) months, non-specific references to
amounts and other requirements for such Contract Year shall be appropriately and
equitably pro-rated.

 

  (i) “Control” and its derivatives, such as “Controlling” means with regard to
any entity the legal, beneficial or equitable ownership, directly or indirectly,
of: (i) fifty percent (50%) or more of the capital stock (or other ownership
interest if not a stock corporation) of such entity ordinarily having voting
rights; or (ii) (A) twenty percent (20%) or more of the capital stock (or other
ownership interest if not a stock corporation) and (B) either (1) a greater
percentage than any other juridical person wherein such person has the power to
exercise, directly or indirectly, a controlling influence on the entity’s
management or policies, or (2) management control in fact or by agreement.

 

  (j) “Deliverable” means any tangible Work Product produced in the course of
performing the Services that is listed or described in this Agreement, or in a
project plan or service request document executed pursuant to this Agreement, or
that is otherwise required to be delivered by Supplier to Health Net in order to
satisfy Supplier’s obligations with respect to any item to be provided by
Supplier under this Agreement or in project plan or other service request
document. For the avoidance doubt, Deliverable include all reports delivered to
Health Net, the Procedures Manual and any training materials created or provided
in order to fulfill IBM’s training obligations under this Agreement.

 

  (k) “Disengagement Assistance” means, collectively, the Functions that Health
Net requests from Supplier or that are otherwise required to enable an orderly
transfer of Services from Supplier to Health Net or its designees without
unreasonable interruption or adverse effect to Health Net in connection with the
cessation of any Services, or the expiration or earlier termination (for any
reason) of this Agreement, in whole or in part, including the Functions
described in Section 16.6 and Schedule L (Disengagement Assistance).

 

  (l) “Disengagement Assistance Period” shall mean the period of time that
Supplier is obligated to provide Disengagement Assistance pursuant to
Section 16.6(b).

 

  (m)

“Documentation” means written materials (including materials published on an
Internet or Intranet site or otherwise online) that are available or necessary
to instruct or assist End Users, operators or systems personnel in the
installation, development, maintenance, operation, use or modification of any
Equipment,

 

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Software, system, or Deliverable (including applicable functional and technical
specifications), as such documentation is updated from time to time.

 

  (n) “Effective Date” has the meaning set forth in the preamble.

 

  (o) “End Users” means direct users of the Services provided under this
Agreement.

 

  (p) “Equipment” means any computer and telecommunications machines or other
hardware (without regard to the entity owning or leasing it) used by the
Supplier in the provision of the Services, including all associated attachments,
features, accessories and peripheral devices.

 

  (q) “Financial Responsibility” has the meaning given in Section 2.1(e) of
Schedule C.

 

 

(r)

“Former Health Net Affiliate” means: (i) any entity affiliated with Health Net
at any time during the Term (such designation expiring at the end of the
twenty-fourth (24th) month after the date that such entity ceases to Control, be
Controlled by, or be under common Control with, Health Net); or (ii) the
purchaser of all or substantially all of the assets of any line of business of
Health Net or its Affiliates (such designation (A) applying only with respect to
the business so acquired; and (B) expiring at the end of the twenty-fourth
(24th) month after the date of such purchase.) At Health Net’s option, each
Former Health Net Affiliate shall be deemed to be an Affiliate of Health Net.

 

  (s) “Health Net Facility” means a Health Net office or business location at
which, or with respect to which, Supplier performs the Services. The Health Net
Facilities are set forth in Schedule F (Facilities).

 

  (t) “IT Infrastructure” means the Equipment and Software (regardless of
ownership) that comprise the infrastructure of Health Net’s and its Affiliates’
information technology organizations.

 

  (u) “Law” means: (i) any applicable law, statute, regulation, ordinance or
subordinate legislation in force from time to time to which a Party or any of
its Affiliates is subject; (ii) the common law as applicable to the Parties or
any of their Affiliates from time to time; (iii) any binding court order,
judgement or decree (including consent agreements); and (iv) any applicable
directive, policy, rule or order that is binding on a Party or any of its
Affiliates and that is made or given by any government, an agency thereof, or
any regulatory body; of any country, the European Union, or other national,
federal, commonwealth, state, provincial or local jurisdiction, and of any
exchange or association (including the New York Stock Exchange and the National
Association of Securities Dealers) whose regulations are binding on either Party
pursuant to a self-regulating mechanism approved by a governmental entity.

 

  (v) “Non-Commercially Available” shall mean Software that is not Commercially
Available.

 

  (w)

“Out-of-Pocket Expenses” means reasonable, demonstrable and actual out-of-pocket
expenses incurred by Supplier for Equipment, materials, supplies or services
provided to or for Health Net as identified in this Agreement, but not

 

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including Supplier’s actual or allocated overhead costs, administrative expenses
or other mark-ups.

 

  (x) “Required Consents” means such consents as may be required for (i) the
assignment to a Party, or the grant to a Party of rights of access and use, of
resources otherwise provided to or licensed by the other Party, and (ii) with
respect to any resource (e.g., Software, Equipment, third party services) for
which the corresponding contract is to be assigned to Health Net or its designee
pursuant to Disengagement Assistance (including any resource existing as of the
Effective Date and assigned to Supplier, as well as any resource utilized or
introduced after the Effective Date during the Term), the disclosure of the
corresponding contract terms to Health Net or its designee, or the assignment of
such contract to Health Net or it designee, as part of Disengagement Assistance.

 

  (y) “Service Commencement Date” shall mean one-hundred and eighty (180) days
following the Effective Date unless the Parties agree to another date through an
amendment to this Agreement.

 

  (z) “Service Tower” has the meaning given in Schedule C (Charges).

 

  (aa) “Software” means program code (in both object code and Source Code forms)
and all supporting documentation, media, on-line help facilities and tutorials,
including any update, enhancement, modification, releases and Derivative Work of
any item comprising Software.

 

  (bb) “Source Code” means the computer code of Software in programming
languages, including all comments and procedural code, and all related
development documents (e.g., flow charts, schematics, statements of principles
of operations, End User manuals, architectural standards, Documentation, and any
other specification that are used to create or that comprise the computer code,
of the Software concerned.

 

  (cc) “Systems Software” means those programs or programming (including the
supporting Documentation, media, on-line help facilities and tutorials) that
perform (i) tasks basic to the functioning of Equipment and which are required
to operate the Applications Software or a system; or (ii) tasks other than as
performed by Applications Software of a system. If programs or programming are
not Applications Software, they are deemed to be Systems Software. Systems
Software includes mainframe, midrange and desktop operating systems, server
operating systems, network operating systems, systems utilities (including
measuring and monitoring tools), data security Software and telecommunications
monitors.

 

  (dd) “Supplier Personnel” means, collectively, any and all personnel furnished
or engaged by Supplier to perform any part of the Services, including: (i) the
employees of Supplier; (ii) Subcontractors; and (iii) the employees of such
Subcontractors.

 

  (ee) “Supplier Software” means Software owned by Supplier or any Supplier
Affiliate. Software owned by Supplier Affiliates shall be treated as Supplier
Software rather than third party Software under this Agreement.

 

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  (ff) “Use” means to access, use, copy, maintain, modify, enhance, perform,
display, distribute and create derivative works; provided, when used in the
context of a Software license, the right to create derivative works shall only
apply to Software for which Health Net is expressly granted a right to (i) use
or obtain Source Code or (ii) create derivative works.

 

  2.2 Other Terms

Other capitalized terms used in this Agreement but not defined above are defined
where they are used and have the meanings there indicated, or such terms appear
in the Glossary attached to the Agreement. Those terms, acronyms, and phrases
utilized in the information technology or health and wellness industry which are
not otherwise defined in this Agreement shall be interpreted in accordance with
their generally understood meaning in such industry or business context.

 

3. SERVICES

 

  3.1 Provision of Services During Transition

 

  (a) Starting on the Effective Date, Supplier shall begin performing Services
required to conduct the Transition.

 

  (b) Starting on the Effective Date, Supplier shall (i) assume the Health Net
Equipment leases, Third Party Service Contracts and Health Net Licensed Software
pursuant to Section 11, and (ii) as Affected Employees are transitioned to IBM,
commence assuming responsibility for meeting Service Levels as provided in
Schedule B (Service Levels) and its Exhibits thereto.

 

  (c) Starting on October 16, 2008 and continuing until the Service Commencement
Date, Supplier shall:

 

  (i) hire certain Transitioned Employees as provided in Schedule E, and assume
responsibility for all functions performed by such employees in the ordinary
course of their responsibilities prior to the date of transfer to Supplier;

 

  (ii) assume responsibility for managing and performing the Services, with the
assistance of Affected Employees retained by Health Net;

 

  (iii) assume responsibility for meeting certain Service Levels as provided in
Schedule B; and

 

  (iv) assume responsibility for managing and performing In-Flight Projects.

 

  3.2 Provision of the Steady-State Services

Starting on the Service Commencement Date, Supplier will provide the following
services, functions and responsibilities, as they may be supplemented, enhanced,
modified or replaced (collectively, the “Services”):

 

  (a) the functions, responsibilities, activities and tasks (collectively,
“Functions”) described in Schedule A (Services) or elsewhere in this Agreement;

 

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  (b) any Functions performed during the *** preceding the Effective Date by
Health Net’s or its Affiliates’ personnel (including employees and contractors)
in the ordinary course of their responsibilities who were transitioned to
Supplier or displaced, or whose Functions were displaced, as a result of this
Agreement even if the Functions are not specifically described in this
Agreement; and

 

  (c) performance, management, and completion of the projects listed or
described in Exhibit A-11 (In-Flight Projects), the Transition and
Transformation as described in Exhibits A-2, A-3, and A-4, and any projects set
forth in this Agreement or any project plans, Work Orders, or other similar
document executed by the Parties.

 

  3.3 Implied Services

If any Functions, related to the Services, other than those retained by Health
Net under this Agreement, are required for the proper performance and provision
of the Services, regardless of whether they are specifically described in the
Agreement, they shall be deemed to be implied by and included within the scope
of the Services to be provided by Supplier to the same extent and in the same
manner as if specifically described in the Agreement. Except as otherwise
expressly provided in the Agreement, Supplier shall be responsible for providing
the facilities, personnel and other resources as necessary to provide the
Services.

 

  3.4 Evolution of the Services

Throughout the Term, Supplier will seek to improve the quality, efficiency and
effectiveness of the Services to keep pace with technological advances and
support Health Net’s (and its Affiliates’) evolving business needs and efforts
to maintain competitiveness in the markets in which it (and they) competes.
Without limiting the generality of the foregoing, Supplier will: (i) identify
and apply ‘best practice’ techniques and methodologies in performing and
delivering the Services, (ii) train Supplier Personnel in new techniques and
technologies used generally within Supplier’s organization or the IT services
industry and approved by Health Net for use in rendering the Services; and
(iii) make investments to maintain the currency of the tools, infrastructure and
other resources used by Supplier to render the Services. Changes in the Services
pursuant to this Section 3.4 will not be considered New Services.

 

  3.5 Users of the Services

 

  (a) Supplier will provide the Services to Health Net and, as designated by
Health Net from time to time, its Affiliates, Former Health Net Affiliates,
licensees, customers, providers, contractors and other entities with whom Health
Net has a business relationship with Health Net which is broader than the mere
resale of Services (each such entity a “Service Recipient”) for the Charges
provided in Schedule C. For purposes of this Agreement, Services provided to
such entities shall be deemed to be Services provided to Health Net.

 

  (b)

With respect to Former Health Net Affiliates, Supplier will continue to provide
the Services being provided as of the date of divestiture to such Former Health
Net Affiliates under this Agreement as is requested by Health Net for as long as
such entity continues to meet the definition of “Former Health Net Affiliate”
(or such shorter period of time designated by Health Net). There shall be no
additional charge or fee (i.e., in addition to the Charges for the actual
Services as

 

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provided in this Agreement) for the provision of Services to Former Health Net
Affiliates; provided if Health Net requires Supplier to make changes to its
operations in order to continue providing Services to a Former Health Net
Affiliate (e.g., create a separate infrastructure environment), the Parties
shall allocate any incremental costs required to implement such changes through
the Change Control Process.

 

  3.6 Services Not Exclusive; Variable

 

  (a) This Agreement is non-exclusive. Nothing in this Agreement shall be
construed to limit in any way Health Net’s ability to request that other third
parties provide, or propose to provide, services that are the same as or similar
to the Services. Health Net (and its Affiliates) may contract with other
suppliers for any products and services, including products and services that
are similar to or competitive with the Services or that formerly were part of
the Services. In the case of Health Net’s withdrawal of portions of the Services
from Supplier, the Charges shall be reduced in accordance with this Agreement,
including the unit rates and charging methodologies provided in Schedule C
(Charges), or otherwise in an equitable manner to the extent such unit rates and
charging methodologies do not apply to the withdrawn portions of the Services.

 

  (b) The Services are variable in volume. Such variations are provided for in
the charging mechanisms set forth in Schedule C (Charges). Supplier shall be
responsible for adjusting the resources used to provide the Services to
accommodate the changes in volume (regardless of the amount of time remaining in
the Term) in such a manner as to comply with all Service Levels. Supplier shall
not be entitled to receive an adjustment to the Charges resulting from such
variations in volume except as set forth in Schedule C (Charges).

 

  (c) Except as set forth in Section 4.5 of Schedule C (Charges), Health Net
(and its Affiliates), make no commitment for any minimum or maximum volume,
scope, or value of the Services under this Agreement or to any minimum or
maximum payments to be made to Supplier.

 

  3.7 Cooperation and Coordination with Other Parties

 

  (a) If Health Net performs itself, or retains a third party to perform, any
services that interface or interact with the Services, or that formerly were
part of the Services, Supplier will cooperate and coordinate with Health Net or
such third party as reasonably required for Health Net or the third party to
perform such services. Supplier’s cooperation and coordination will include, as
applicable: (i) providing reasonable access to the facilities being used by
Supplier to provide the Services as necessary for Health Net or the third party
to perform its work; (ii) providing reasonable access to the Equipment and
Software used in providing the Services to the extent permitted under any
applicable agreements with third parties; and (iii) providing such information
regarding the operating environment, system constraints and other operating
parameters as a person with reasonable commercial skills and expertise would
find reasonably necessary for Health Net or the third party to perform its work.

 

  (b)

Third parties retained by Health Net who utilize Supplier’s resources shall
comply with Supplier’s reasonable security and confidentiality requirements and,

 

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as relevant, with Supplier’s reasonable work standards, methodologies and
procedures, if provided in writing by Supplier to Health Net and such third
parties. Supplier shall immediately notify Health Net if an act or omission of
such a third party may cause a problem or delay in providing the Services and
shall work with Health Net to prevent or circumvent such problem or delay.

 

  3.8 New Services

 

  (a) “New Services” means functions, responsibilities, activities, and tasks
Health Net requests Supplier to perform under this Agreement:

 

  (i) that are materially different from, and in addition to, the Services, and

 

  (ii) for which there is no existing charging mechanism in this Agreement.

 

  (b) Supplier will not perform any additional functions, responsibilities,
activities, or tasks that would constitute New Services prior to informing
Health Net what the additional charges would be for performing them, and
receiving Health Net’s authorization to proceed. Additionally, if Supplier does
perform additional functions, responsibilities, activities, or tasks without
Health Net’s prior authorization, they will be deemed to have been performed as
part of the Services at no charge.

 

4. TERM AND REGULATORY APPROVALS

 

  4.1 Initial Term

The term of this Agreement shall commence on the Effective Date and expire on
February 14, 2014 unless it is terminated earlier or is extended pursuant to the
terms of this Agreement (such period, together with all extensions thereof, the
“Term”).

 

  4.2 Renewal Terms

By giving notice to Supplier no less than three months prior to the
then-existing expiration date of the Agreement, Health Net may extend the Term
for a period designated by Health Net of up to six (6) months on the terms and
conditions (including pricing) then in effect. Health Net shall have three
(3) such extension options of up to six months each.

 

  4.3 Regulatory Approvals and Federal Business

 

  (a) Health Net’s obligations under this Agreement are conditioned upon Health
Net obtaining regulatory consents and approvals from the appropriate
governmental or other regulatory body necessary or advisable for Health Net to
obtain in order to proceed with the transactions contemplated by this Agreement.
In the event that Health Net is not able to obtain such a consent or approval,
Health Net shall have the right to remove any impacted services from the scope
of this Agreement without charge, and the Parties shall cooperate to make such
changes as may be necessary to remove such Services from scope, subject to
Section 4.5 and Section 10 in Schedule C.

 

  (b) Supplier shall comply with provisions arising out of Health Net’s
contracts for federal business, including restrictions against providing
services from offshore and audit requirements.

 

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5. PERFORMANCE

 

  5.1 Performance, Generally

Supplier is responsible for managing and successfully performing, completing,
and delivering the Services, subject to the overall direction of Health Net and
with the cooperation and support of Health Net as specified in this Agreement.

 

  5.2 Place of Performance

 

  (a) Supplier will perform the Services primarily at the Health Net Facilities
described in Section 2 of Schedule F (Facilities), and the Supplier facilities
and Approved Subcontractor facilities described in Sections 3 and 4 of Schedule
F (Facilities), respectively, (the “Supplier Facilities”). During the Term,
Supplier will not change any location from which it provides Services to Health
Net, or materially reallocate the volume or nature of work processed between
locations from which it provides Services to Health Net, without Health Net’s
prior written approval, which may be granted or withheld in Health Net’s
discretion. Supplier will manage any approved relocations in accordance with
this Agreement and a migration plan to be prepared by Supplier and approved by
Health Net. Prior to seeking Health Net’s approval of any proposed relocation,
Supplier will fully examine and evaluate the risks and anticipated effects of
the contemplated relocation on the Services and Health Net, including the
operational, technical, security, regulatory, and other effects, and will
prepare and submit to Health Net an analysis of the effects. Supplier will be
responsible for all costs, taxes and other expenses incurred by Supplier, and
any new or additional costs, taxes and other expenses incurred by Health Net and
reasonably demonstrated to Supplier that are related to any Supplier-initiated
relocation of an operational facility from which the Services are provided.

 

  (b) Restrictions on Offshore Services.

 

  (i) Exhibit A-3 (Solution Description) describes certain Services Supplier is
permitted to perform from locations outside the United States. Supplier shall
not perform any other Services from a location outside the United States without
Health Net’s prior written consent, which may be granted or withheld in Health
Net’s discretion.

 

  (ii) Schedule F shows the address of the Supplier Facilities outside the
United States from which Supplier shall provide Services. Supplier shall not
relocate the specific location (i.e., facility) from which Supplier provides
such Services without Health Net’s prior written consent.

 

  5.3 Time of Performance

 

  (a) Supplier will (and will provide the resources necessary to) perform and
complete the Services diligently and in a timely manner and in accordance with
any applicable time schedules set forth in this Agreement.

 

  (b)

Supplier will promptly notify Health Net upon becoming aware of any
circumstances that may reasonably be expected to jeopardize the timely and
successful completion (or delivery) of any Service, project or Deliverable.

 

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Supplier will use Commercially Reasonable Efforts to avoid or minimize any
delays in performance and will inform Health Net of the steps Supplier is taking
or will take to do so, and the projected actual completion (or delivery) time.

 

  (c) If Supplier believes a delay in performance by Health Net (or a third
party service provider Health Net is responsible for managing) has caused or
will cause Supplier to be unable to perform its obligations on time, Supplier
will promptly so notify Health Net and use Commercially Reasonable Efforts to
perform its obligations on time notwithstanding Health Net’s (or its third party
service provider’s) failure to perform. If Supplier’s use of Commercially
Reasonable Efforts to perform on time in such a circumstance would cause
Supplier to incur significant Out-of-Pocket Expenses, Supplier will so notify
Health Net. In that case, Supplier’s obligation to continue its efforts to work
around the Health Net-caused delay will be subject to Health Net agreeing to
reimburse Supplier for its additional Out-of-Pocket Expenses incurred in the
course of such efforts.

 

  5.4 Manner of Performance

Except as this Agreement expressly provides otherwise, Supplier will perform the
Services at least at the same level and with at least the same degree of
accuracy, quality, timeliness, responsiveness and efficiency as was provided
prior to the Effective Date by or for Health Net and other Service Recipients
and in compliance with the following:

 

  (a) all applicable Service Levels;

 

  (b) the Procedures Manual;

 

  (c) applicable standards, policies and procedures of Health Net (and its
Affiliates) listed in Schedule O (Health Net Policies and Procedures) which the
Parties acknowledge have been disclosed to Supplier prior to the Effective Date,
and any new or amended Health Net standards, policies and procedures disclosed
to Supplier after the Effective Date. If compliance with any new or revised
Health Net standards, policies and procedures requires Supplier to incur
additional costs, and such compliance is not otherwise required by Supplier
under this Agreement, then the following shall apply:

 

  (i) if such compliance requires Supplier to perform additional functions that
would be considered New Services or Projects under this Agreement, then the
corresponding processes for authorizing and pricing New Services and Projects
shall apply; or

 

  (ii) if such compliance requires Supplier to change the manner in which it
provides existing Services, then such Changes shall be implemented through the
Change Control Process.

 

  (d) Laws for which Supplier is responsible pursuant to Section 27.5; and

 

  (e) In cases where this Agreement does not prescribe or otherwise regulate the
manner of Supplier’s performance of the Services, proven best practices followed
by the leading providers of similar services as required under Section 19.1.

 

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  5.5 Quality Assurance and Continuous Improvement

In performing the Services, Supplier will follow commercially reasonable quality
assurance procedures designed to ensure that the Services are performed with a
high degree of professional quality and reliability. Such procedures shall
include checkpoint reviews, testing, acceptance, and other procedures for Health
Net to confirm the quality of Supplier’s performance. Supplier, as part of its
total quality management process, will provide continuous quality assurance and
quality improvement through: (i) the identification and application of proven
techniques and tools from other installations within its operations; and
(ii) the implementation of concrete programs, practices and measures designed to
improve performance (including the Service Levels). Supplier will utilize
project management tools, including productivity aids and project management
systems, as appropriate in performing the Services.

 

  5.6 User Satisfaction

 

  (a) Working in consultation with Health Net, Supplier will conduct a survey
annually (or on such other frequency as the Parties may agree) of an agreed
percentage of Health Net’s internal user community (i.e., not including Health
Net customers). The surveys will be designed to determine the level of
satisfaction with the Services and identify areas where satisfaction could be
improved. The surveys will include representative samples of each major category
of Health Net internal users and an agreed number of in-depth, face-to-face or
telephone interviews. Health Net and Supplier will mutually agree on the form
and content of the surveys, which will be no less thorough than those used
customarily by Supplier. The Parties will jointly review the results of the
surveys, and Supplier will develop and carry out a plan to improve satisfaction
in areas where Health Net considers it to be lower than it should be.

 

  (b) Health Net’s satisfaction with the Services will be taken into account by
Supplier in its performance appraisals of Supplier Personnel.

 

6. SERVICE LEVELS

 

  6.1 General

Quantitative performance standards for certain of the Services (“Service
Levels”) are set forth in Schedule B (Service Levels).

 

  6.2 Failure to Perform

 

  (a) Supplier will place an amount equal to the Amount at Risk (as defined in
Schedule B) at risk each month for Service Level Credits. Supplier’s obligation
to pay Service Level Credits is further described in Schedule B.

 

  (b) Health Net may allocate two hundred fifty (250) percentage points among
Critical Service Levels for the purpose of calculating Service Level Credits, as
further described in Schedule B.

 

  (c) The total Service Level Credits payable in any calendar month will not
exceed the Amount at Risk for such month.

 

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  (d) Upon notice to Supplier, Health Net may, in its sole discretion,
(i) change the designation of any Service Level to a Critical Service Level, or
change the designation of any Critical Service Level to a non-Critical Service
Level; and (ii) change the Weighting Factors for the existing or newly
designated Critical Service Levels; provided that (i) Health Net may provide
only one such notice during any calendar quarter (which notice may contain
multiple changes) and (ii) the total Weighing Factors may not exceed ***
percentage points.

 

  (e) Health Net shall have the right to add new Service Levels and Critical
Service Levels pursuant to Schedule B (Service Levels).

 

7. SUPPLIER PERSONNEL

 

  7.1 Provision of Suitable Personnel

Supplier will assign an adequate number of Supplier Personnel to perform the
Services who are properly educated, trained, familiar with and fully qualified
for the Services they are assigned to perform, and Supplier shall ensure (to the
extent reasonably possible) that any outgoing Supplier Personnel leaving the
Health Net account spend a reasonable period of time training the new Supplier
Personnel who will be replacing such outgoing personnel. Supplier is responsible
for taking action at its own expense such that Supplier Personnel assigned to
perform Services have the legal right to work in the countries in which they are
assigned to work.

 

  7.2 Screening and Background Checks

 

  (a) Supplier shall, at no additional expense to Health Net, and prior to
placing any Supplier Personnel at Health Net or on the Health Net account,
complete background checks for all such personnel (“Background Checks”).
Background Checks shall include I-9 completion, screening in State, county,
federal and other applicable jurisdictions to identify felonies and misdemeanor
convictions and verify the social security number of such personnel, if
applicable to such personnel, and any other screening required to comply with
applicable Law. If requested by Health Net, Supplier shall perform additional
background checks of Supplier Personnel at Health Net’s expense.

 

  (b) The personnel will be asked for education and, with respect to United
States resident personnel, the last seven (7) years of residences. Subject to
applicable Law, Supplier Personnel may be tested for drugs and/or alcohol
whenever Supplier or Health Net has reasonable suspicion that the personnel is
under the influence of drugs and/or alcohol in the workplace or has violated the
substance abuse policy. Such personnel have the right to refuse to submit to
drug or alcohol testing, however, personnel who do so will be subject to removal
from the Health Net account. Results of Background Checks and drug testing will
remain Supplier’s Confidential Information and will not be provided to Health
Net, but any negative or questionable Background Check or drug test of a
personnel will require Supplier to remove or not assign such personnel. Supplier
shall hire all Supplier Personnel and other personnel involved in the Health Net
account strictly in accordance with all Laws applicable to the hiring and
employment of individuals including, without limitation, the Fair Labor
Standards Act, Immigration Reform and Control Act and all equal employment
opportunity Laws.

 

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  7.3 Responsibility for Supplier Personnel, Generally

Supplier will manage, supervise and provide direction to Supplier Personnel and
cause them to comply with the obligations and restrictions applicable to
Supplier under this Agreement. Supplier will make Supplier Personnel aware of,
and cause them to comply with, Health Net’s safety and security policies that
have been made known to Supplier while they are performing Services at Health
Net Facilities or accessing Health Net Data or systems. As between Supplier and
Health Net, Supplier is responsible for all wages, salaries and other amounts
due Supplier Personnel, and for all tax withholdings, unemployment insurance
premiums, pension and social welfare plan contributions, and other employer
obligations with respect to Supplier Personnel. Supplier is responsible for the
acts and omissions of Supplier Personnel under or relating to this Agreement.

 

  7.4 Key Supplier Positions

 

  (a) “Key Supplier Positions” means those positions designated as Key Supplier
Positions in Schedule D (Key Supplier Positions). Supplier’s Project PE will be
one of the Key Supplier Positions. Supplier will cause each of the Supplier
Personnel filling the Key Supplier Positions (whether as of the Effective Date,
or replacement personnel filling such Key Supplier Position during the Term) to
devote substantially full time and effort to the provision of the Services.
Supplier Personnel approved as of the Effective Date to fill the Key Supplier
Positions are listed in Schedule D (Key Supplier Positions).

 

  (b) Before the initial and each subsequent assignment of an individual to a
Key Supplier Position, Supplier will notify Health Net of the proposed
assignment, introduce the individual to appropriate Health Net representatives
and, consistent with Supplier’s personnel practices, provide Health Net a
curriculum vitae and other information about the individual reasonably requested
by Health Net. Upon request, Supplier will provide Health Net representatives an
opportunity to meet with the individual. If Health Net in good faith objects to
the proposed assignment, the Parties will attempt to resolve Health Net’s
concerns on a mutually agreeable basis. If the Parties have not been able to
resolve Health Net’s concerns within five (5) Business Days, Supplier may not
assign the individual to that position and must propose the assignment of
another suitably qualified individual.

 

  (c) Health Net may from time to time change the positions designated as Key
Supplier Positions under this Agreement. However, without Supplier’s consent,
the number of Key Supplier Positions may not exceed the number designated in
Schedule D (Key Supplier Positions) as of the Effective Date, except as set
forth in Footnote 3 of Schedule D.

 

  (d)

Supplier will not reassign or replace any person assigned to a Key Supplier
Position during the time period described in Footnote 1 to Schedule D. Supplier
will give Health Net, where reasonably possible, at least ninety (90) days
advance notice of a proposed change in personnel filling a Key Supplier
Position, and will discuss with Health Net any objections Health Net may have.
Supplier will arrange, at no charge, for the proposed replacement to work
side-by-side with the individual being replaced during the notice period to
effectuate a seamless transfer of knowledge prior to the incumbent leaving the
Key Supplier Position. Individuals filling Key Supplier Positions may not be
transferred or re-assigned until a suitable replacement has been approved by
Health Net, and no

 

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such re-assignment or transfer may occur at a time or in a manner that would
have an adverse impact on delivery of the Services or Health Net’s operations.
Supplier will establish and maintain an up-to-date succession plan for the
individuals serving in Key Supplier Positions.

 

  7.5 Removal and Replacement of Supplier Personnel

Health Net may immediately remove any Supplier Personnel from any Health Net
Facilities if the person is threatening or abusive, commits a crime, engages in
an act of dishonesty while performing Services for Health Net or violates Health
Net’s policies and procedures pertaining to safety, security or use of Health
Net Facilities. If Health Net determines in good faith that the continued
assignment to Health Net’s account of any of the Supplier Personnel is not in
the best interests of Health Net, then Health Net may give Supplier written
notice to that effect. After receipt of such a notice, Supplier will have a
reasonable period of time (not to exceed ten (10) Business Days) in which to
investigate the matters stated in the notice, discuss its findings with Health
Net and resolve Health Net’s concerns. If, following such process, Health Net
requests replacement of the individual, Supplier will replace the individual
with another suitably qualified person.

 

  7.6 Controlling Turnover of Supplier Personnel

Health Net and Supplier agree that it is in their mutual best interests to keep
the turnover rate of Supplier Personnel to a reasonably low level. Accordingly,
if Health Net believes that Supplier’s turnover rate is excessive and so
notifies Supplier, Supplier will provide data concerning its turnover rate and
meet with Health Net to discuss the reasons for, and impact of, the turnover
rate. If appropriate, Supplier will submit to Health Net its proposals for
reducing the turnover rate and the Parties will mutually agree on a program to
bring the turnover rate down to an acceptable level. In any event, Supplier will
use Commercially Reasonable Efforts to keep the turnover rate to a reasonably
low level. Notwithstanding any turnover of Supplier Personnel, Supplier remains
obligated to perform the Services in compliance with the requirements of this
Agreement.

 

  7.7 Subcontracting

“Subcontractor” means a third party engaged by Supplier to provide products
and/or services used by Supplier in rendering the Services, as well as any
entity to whom a Subcontractor further subcontracts (or otherwise sub-delegates)
any of its subcontracted duties or obligations. Supplier may subcontract or
delegate the performance of Services only in accordance with the following:

 

  (a) Supplier may subcontract the performance of Services to any of its
wholly-owned Affiliates who are qualified to conduct business in the United
States.

 

  (b)

Except as provided in Section 7.7(a), Supplier shall not subcontract for
performance of, or delegate any of its responsibilities under this Agreement
without first obtaining the prior written approval of Health Net, provided such
approval shall not be required for subcontracts with an annual contract value of
less than $500,000. When seeking such approval, Supplier will (i) give Health
Net reasonable prior written notice specifying the components of the Services
affected, the scope of the proposed subcontract, the identity and qualifications
of the proposed Subcontractor and the results of any due diligence carried out
with regard to the proposed Subcontractor; and (ii) at Health Net’s request,
provide Health Net a description of the scope. Health Net may approve or reject
proposed Subcontractors in its discretion. Health Net may require Supplier to

 

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replace any previously approved Subcontractor found, in the reasonable judgment
of Health Net, to be unacceptable. Any such Subcontractors approved by Health
Net, in its discretion, shall be an “Approved Subcontractor” hereunder.

 

  (c) IBM shall provide Health Net with a quarterly report identifying (i) each
subcontract with an annual spend of greater than $500,000, including
subcontracts that began below $500,000 and grew during the term; and (ii) the
annual spend of such subcontract (expressed as a percentage of the then-current
Annual Services Charge).

 

  (d) Approved Subcontractors as of the Effective Date are listed in Schedule P
(Approved Subcontractors).

 

  (e) In any subcontracts entered into by Supplier after the Effective Date for
performance of the Services, Supplier will require the Subcontractor to be bound
to Supplier by all applicable terms of this Agreement and to assume toward
Supplier all of the applicable obligations and responsibilities that Supplier,
by this Agreement, has assumed toward Health Net.

 

  (f) Supplier may use Approved Subcontractors to perform the Services to the
extent permitted by Health Net’s approval. Supplier is responsible for managing
all Subcontractors. Supplier remains responsible for all Functions delegated to
Subcontractors to the same extent as if such Functions were to be performed by
Supplier acting through its officers, directors, employees, and agents and, for
purposes of this Agreement, such Functions will be deemed Functions performed by
Supplier. Supplier will be Health Net’s sole point of contact regarding the
Services, including with respect to payment.

 

  (g) Supplier may disclose Health Net Confidential Information only to Approved
Subcontractors who have agreed in writing to protect the confidentiality of such
Confidential Information in a manner substantially equivalent to that required
of Supplier under this Agreement and to permit both Supplier and Health Net, or
both, to enforce such terms directly against such Subcontractor. As between the
Parties, Supplier shall be responsible for all acts and omissions of
(i) Supplier’s independent contractors and other Subcontractors as if they were
Supplier’s employees (including acts and omissions of such independent
contractors and other Subcontractors for purposes of determining Supplier’s
liability under this Agreement or responsibility for indemnity claims made under
this Agreement) and (ii) any third party to whom Supplier permits access to
Health Net Data or Health Net Confidential Information.

 

  7.8 Managed Third Parties

“Managed Third Parties” are third parties under contract to Health Net or its
Affiliates who supply products and services used by Supplier in rendering the
Services. Examples of Managed Third Parties are the suppliers under the Health
Net contracts referenced in Section 11 (Transfer and Use of Resources) that have
not been assigned to Supplier. Except where Schedule A (Services) provides
otherwise, Supplier is responsible for coordinating with and managing the
performance of the Managed Third Parties. Supplier’s responsibilities with
respect to Managed Third Parties are set forth in Schedule A.

 

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8. HEALTH NET RESPONSIBILITIES

 

  8.1 Appointment of Health Net Program Management Office (PMO) Personnel

 

  (a) Health Net will designate an individual to serve as Health Net’s “Program
Manager”, who will be Supplier’s principal point of contact for obtaining
decisions, information, approvals and acceptances required from Health Net.

 

  (b) Health Net will also designate individuals to serve in the Health Net PMO
roles described in the Contract Governance Plan pursuant to Schedule G
(Governance).

 

  8.2 Health Net Cooperation Duties

 

  (a) In support of Supplier’s performance of the Services and subject to
Section 8.3, Health Net will perform the Functions identified in this Agreement
as retained Health Net Functions and provide or make available to Supplier the
Equipment, Software, Health Net Facilities and other resources that this
Agreement specifies are to be provided by Health Net.

 

  (b) Health Net will cooperate with Supplier, including by making available
management decisions, information, approvals and acceptances, as reasonably
requested by Supplier so that Supplier may accomplish its obligations and
responsibilities under this Agreement.

 

  8.3 Savings Clause

Health Net’s failure to perform its responsibilities set forth in this Agreement
(or cause them to be performed) will not constitute grounds for termination by
Supplier except as provided in Section 16.3 (Termination by Supplier).
Supplier’s nonperformance of its obligations under this Agreement will be
excused if and to the extent (a) such Supplier nonperformance results from
Health Net’s failure to perform its responsibilities, and (b) Supplier provides
Health Net with reasonable notice of such nonperformance and uses Commercially
Reasonable Efforts to perform notwithstanding Health Net’s failure to perform.
If Supplier’s use of Commercially Reasonable Efforts to perform in such a
circumstance would cause Supplier to incur significant Out-of-Pocket Expenses,
Supplier may so notify Health Net. If it does, Supplier’s obligation to continue
its efforts to work around Health Net’s failure to perform will be subject to
Health Net agreeing to reimburse Supplier for its additional Out-of-Pocket
Expenses incurred in the course of such efforts. SUPPLIER ACKNOWLEDGES THAT
HEALTH NET WOULD NOT BE WILLING TO ENTER INTO THIS AGREEMENT WITHOUT ASSURANCE
THAT THIS AGREEMENT MAY NOT BE TERMINATED BY SUPPLIER AND THAT SUPPLIER SHALL
NOT HAVE THE RIGHT TO SUSPEND PERFORMANCE OF THE SERVICES EXCEPT, AND ONLY TO
THE EXTENT, EXPLICITLY PROVIDED HEREIN.

 

9. CHARGES

Schedule C (Charges) sets forth all the Charges payable to Supplier for
performing the Services and the associated invoicing and payment procedures and
terms. Health Net will not be required to pay Supplier any amounts for or in
connection with performing the Services and fulfilling Supplier’s obligations
under this Agreement other than those amounts payable to Supplier under
Schedule C (Charges) and the following Sections: Section 5.3 (Time of
Performance);

 

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Section 8.3 (Savings Clause); Section 11.10 (Terms Applicable to Health Net
Facilities, Generally); Section 16.1 (Termination by Health Net); Section 16.4
(Extension of Termination Date); and Section 18.4 (Records Retention).

 

  9.1 Pass-Through Expenses

 

  (a) “Managed As Pass-Through Expenses” means third party charges that are to
be both (A) paid by IBM and reimbursed by Health Net on an Out-of-Pocket
Expenses basis, and (B) administered by Supplier. All Managed As Pass-Through
Expenses are identified in Schedules I, J and N. Additional Managed As
Pass-Through Expenses may be added pursuant to Exhibit C-10 to Schedule C or as
otherwise mutually agreed by the Parties. Supplier shall arrange for delivery by
third parties to Supplier of invoices for Managed As Pass-Through Expenses, and
Supplier promptly shall review such invoices and provide Health Net with the
original invoice together with a statement identifying which charges are proper
and valid and should be paid by Supplier as set forth above. Supplier will pay
Managed As Pass-Through Expenses invoices on time and will be responsible for
any late fees, interest, or other similar payments incurred, unless late payment
is due to the fault of Health Net. Supplier shall track the payment status of
Managed As Pass-Through Expenses and provide a consolidated report of such
status upon Health Net’s request.

 

  (b) “Pure Pass-Through Expenses” means third party charges for which
(i) Health Net shall retain responsibility for all obligations for such
contracts, including obligations to review each invoice for accuracy; and
(ii) Supplier’s only obligation with regard to such Pure Pass-Through Expenses
shall be as a payment agent and as set forth below. All Pure Pass-Through
Expenses are identified in Schedules I, J and N. Additional Pure Pass-Through
Expenses may be added pursuant to Exhibit C-10 to Schedule C or as otherwise
mutually agreed by the Parties. So long as Health Net provides to Supplier the
invoice for a Pure Pass-Through Expense and the funds to be used for the payment
of such invoice within a period of time prior to the due date of such invoice
that is reasonably sufficient to enable Supplier to pay such invoice prior to
such due date, Supplier will pay such Pure Pass-Through Expense invoice on time
and will be responsible for any late fees, interest, or other similar payments
incurred due to Supplier’s failure to pay such invoice on time. Except as set
forth above, Supplier shall have no further obligations with regard to such
payment (implied or otherwise). Supplier shall track the payment status of Pure
Pass-Through Expenses and provide a consolidated report of such status upon
Health Net’s request.

 

  (c)

Supplier shall use Commercially Reasonable Efforts to minimize the amount of
Managed As Pass-Through Expenses. With respect to services or materials paid for
on a Managed As Pass-Through Expenses basis, Health Net reserves the right to:
(i) obtain such services or materials directly from a third party;
(ii) designate the third party source for such services or materials;
(iii) designate the particular services or materials (e.g., equipment make and
model) Supplier shall obtain; (iv) designate the terms for obtaining such
services or materials (e.g., purchase or lease and lump sum payment or payment
over time); (v) require Supplier to identify and consider multiple sources for
such services or materials or to conduct a competitive procurement; and
(vi) review and approve the applicable

 

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Managed As Pass-Through Expenses before entering into a contract for particular
services or materials.

 

  9.2 Incidental Expenses

Supplier acknowledges that, except as may be otherwise provided in this
Agreement, expenses that Supplier expects to incur in performing the Services
(including travel and lodging, document reproduction and shipping, and
long-distance telephone) are included in Supplier’s Charges and rates set forth
in this Agreement. Accordingly, such Supplier expenses are not separately
reimbursable by Health Net unless, on a case-by-case basis for unusual expenses,
Health Net has agreed in advance and in writing to reimburse Supplier for the
expense.

 

  9.3 Taxes

The Parties’ respective responsibilities for taxes arising under or in
connection with this Agreement shall be as follows:

 

  (a) Each Party shall be responsible for any personal property taxes on
property it owns or leases, for franchise and privilege taxes on its business,
and for taxes based on its net income or gross receipts.

 

  (b) Supplier shall be responsible for any sales, use, excise, value-added,
services, consumption and other taxes and duties payable by Supplier on the
goods or services used or consumed by Supplier in providing the Services where
the tax is imposed on Supplier’s acquisition or use of such goods or services
and the amount of tax is measured by Supplier’s costs in acquiring such goods or
services.

 

  (c) Health Net shall be responsible for any sales, use, excise, value-added,
services, consumption or other tax existing as of the Effective Date that is
assessed on the provision of the Services as a whole, or on any particular
Service by any governmental or taxing authority within the United States;
provided, however, that (i) Supplier invoices reflect on a current basis (and in
any event before any such tax becomes due and payable) the amount of any such
tax in each jurisdiction and the taxable Services to which such tax relates,
(ii) if Supplier fails to reflect on its invoice any such tax on a current
basis, Supplier shall be financially responsible for any penalties and interest
assessed by the taxing authority with respect to such tax, and (iii) if Supplier
fails to reflect any such tax on a Supplier invoice within *** after such tax
should have been invoiced, Supplier shall be financially responsible for the
full amount of such tax, including any penalties and interest. Subject to Health
Net’s right to terminate the Agreement relating to taxes set forth in
Section 16.1(h), Health Net shall bear the responsibility for any sales, use,
excise, value-added, services, consumption or other tax becoming applicable
during the Term (or that is increased during the Term) that is assessed on the
provision of the Services as a whole, or on any particular Service by any
governmental or taxing authority within the United States (subject to items
(i)-(iii) above).

 

  (d) Supplier shall be responsible for any sales, use, excise, value-added,
services, consumption or other tax that is assessed on the provision of the
Services as a whole, or on any particular Service by any governmental or taxing
authority outside the United States as of the Effective Date or during the Term.

 

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  (e) Supplier shall be responsible for any payments required to compensate
Supplier Personnel for compensatory tax treatment resulting from Supplier
Personnel traveling to perform services, subject to the remainder of this
paragraph. In the event that the assignment (or potential assignment) of
particular Supplier Personnel to perform Services for Health Net has reached a
point such that the continued assignment of such particular personnel is likely
to trigger compensatory tax treatment of the travel related expenses reimbursed
to such particular Supplier Personnel, Supplier may inform Health Net in writing
that Supplier is close to becoming subject to compensatory tax treatment as a
result of such assignment, and shall provide an estimate of the amount of such
compensatory tax liability. If Supplier fails to so notify Health Net, Supplier
shall remain responsible for any amounts resulting from compensatory tax
treatment of such particular Supplier personnel. Following such notice by
Supplier, Health Net may then elect by sending written notice to Supplier to be
financially responsible for any payments required to compensate Supplier with
respect to such particular Supplier Personnel in an amount equal to the
compensatory taxes assessed to such particular Supplier Personnel as the result
of such assignment to the Health Net account. If Health Net does not so elect,
Supplier shall remain responsible for any amounts resulting from compensatory
tax treatment of such particular Supplier Personnel, provided, however, Supplier
may then relocate such personnel to avoid such taxes, and the Parties shall
cooperate to make other arrangements so that the Services will be performed
without interruption.

 

  (f) In the event that a sales, use, excise, value added, services, consumption
or other tax is assessed on the provision of any of the Services, the Parties
shall work together to segregate the payments under this Agreement into three
(3) payment streams:

 

  (i) those for taxable Services;

 

  (ii) those for which Supplier functions merely as a payment agent for Health
Net in receiving goods, supplies, or services (including leasing and licensing
arrangements); and

 

  (iii) those for other nontaxable Services.

 

  (g) The Parties agree to cooperate with each other to enable each to more
accurately determine its own tax liability and to minimize such liability to the
extent legally permissible. Supplier’s invoices shall separately state the
amounts of any taxes Supplier is collecting from Health Net, and Supplier shall
remit such taxes to the appropriate authorities. Each Party shall provide and
make available to the other any resale certificates, information regarding
out-of-state or out-of-country sales or use of equipment, materials or services,
and other exemption certificates or information reasonably requested by the
other Party.

 

  (h)

Supplier shall promptly notify Health Net of, and coordinate with Health Net the
response to and settlement of, any claim for taxes asserted by applicable taxing
authorities for which Health Net is responsible hereunder, it being understood
that with respect to any claim arising out of a form or return signed by a Party
to this Agreement, such Party shall have the right to elect to control the
response to and settlement of the claim, but the other Party shall have all
rights to participate

 

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in the responses and settlements that are appropriate to its potential
responsibilities or liabilities. If Health Net requests Supplier to challenge
the imposition of any tax, Supplier shall do so in a timely manner and Health
Net shall reimburse Supplier for the reasonable legal fees and expenses it
incurs. Health Net shall be entitled to any tax refunds or rebates granted to
the extent such refunds or rebates are of taxes that were paid by Health Net.

 

  (i) Supplier is responsible, at its own risk and expense, for determining the
extent (if any) to which Supplier will be required to collect and remit
national, federal, state or local (or foreign) taxes: (i) on (or in respect of)
any products or Services provided by Supplier or any of its Approved
Subcontractors under this Agreement in the jurisdictions in (or from) which
Supplier chooses to provide the Services, or (ii) on (or in respect of)
Supplier’s charges to Health Net under this Agreement.

 

  9.4 Benchmarking

 

  (a) Benchmark Towers: For purposes of this Section 9.4, the “Network Towers”
shall mean the Service Towers (as defined in Schedule C) for (1) Voice Network
Services and (2) Data Network Services; and the “IT Towers” shall mean all
Service Towers other than the Network Towers.

 

  (b) Frequency. Health Net shall have the right at any time during the Term,
beginning March 1, 2010, to benchmark the Charges for one or more Service
Towers, each benchmark to be of all the Services within such Service Tower in
the aggregate, provided that benchmarking of Charges for a particular Service
Tower cannot be initiated (i) more than one (1) time in any ***period or
(ii) more than *** times during the Term, and further provided that Health Net
shall not be permitted to benchmark the Cross Tower Services Tower separately,
but Cross Tower Services Charges attributable to a Service Tower being
benchmarked shall be factored into the Charges for such benchmarked Service
Tower in conducting the benchmarking for such Service Tower. The Parties
acknowledge that for purposes of applying the time periods above, a benchmarking
shall begin after a contract with a Benchmarker has been executed and the
Benchmarker has commenced performance of services under that contract (each a
“Benchmarking Commencement Date”). For example, Health Net may initiate the
benchmarking process in 2009 provided the Benchmarking Commencement Date does
not occur until March 1, 2010.

 

  (c) Engagement of Benchmarker and Cooperation. A benchmarking under this
Section shall be conducted by an independent industry-recognized benchmarking
service provider designated by Health Net and approved by Supplier
(“Benchmarker”), subject to the following:

 

  (i) Subject to Section 9.4(c)(v), the Benchmarker shall not be a Supplier
Competitor as set forth in Schedule V (Supplier Competitors).

 

  (ii)

The Benchmarker will execute a tripartite agreement with Health Net and Supplier
which shall reflect the requirements set forth in this Agreement. Neither Party
shall have the right to require terms in such tripartite agreement that either
(A) are materially different from the applicable confidentiality provisions set
out in this Agreement, or (B) are not set out

 

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in this Agreement but would cause unreasonable delay in executing such
tripartite agreement.

 

  (iii) The Benchmarker shall not be compensated on a contingency fee or
incentive basis.

 

  (iv) Prior to conducting the benchmark, the Benchmarker will execute
appropriate confidentiality agreements with Health Net and Supplier, which will
(A) be consistent with the confidentiality provisions of this Agreement and
(B) prohibit the Benchmarker from using data provided by Health Net and Supplier
for any purpose other than conducting the benchmark of the Services.

 

  (v) The Parties agree that Gartner, Inc. and Nautilus Advisors, LLC are
acceptable Benchmarkers.

 

  (vi) The Parties shall each be responsible for fifty percent (50%) of the
charges for the Benchmarker.

 

  (vii) The Parties shall cooperate with the Benchmarker, including, as
appropriate, promptly making available knowledgeable personnel and pertinent
documents and records.

 

  (d) Benchmark Process. The Benchmarker shall perform the benchmarking in
accordance with the following benchmark process (the “Benchmark Process”):

 

  (i) The Benchmarker will conduct the benchmark using a Representative Sample
(defined below).

 

  (ii) Prior to performing the benchmark comparison, the Benchmarker will
provide and review the Benchmarker’s methodology with Health Net and Supplier,
and will explain the normalization approach that will be applied.

 

  (iii) Health Net and Supplier will work with the Benchmarker to appropriately
document any changes they mutually agree to make to the Benchmarker’s
methodology.

 

  (iv) The Benchmarker shall make adjustments to data relating to each of the
Comparators in the Representative Sample to the extent necessary to account for
differences between the Services provided to Health Net and the services
provided to the respective Comparators that may impede a true “like-for-like”
comparison, taking into consideration the following normalization factors:

 

  (A) scope and nature of services;

 

  (B) respective services environments;

 

  (C) the hardware or software used or required to provide the services;

 

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  (D) geographic disparity of services delivery locations (including the
percentage of services delivered outside the United States) and recipient
locations;

 

  (E) industry differences affecting information technology costs;

 

  (F) volume of services being provided;

 

  (G) duration of the contractual commitment;

 

  (H) service levels;

 

  (I) complexity factors (including operating environment);

 

  (J) degree of standardization;

 

  (K) financial engineering, investments and allocations;

 

  (L) financing provided by Supplier;

 

  (M) any additional or value added services performed by Supplier and not
received by the Comparator(s) (or performed for Comparators and not for Health
Net) including Health Net’s or the Comparators’ unique requirements, limitations
and human resources terms and conditions; and

 

  (N) any other relevant factors.

 

  (v) The Benchmarker will meet with Health Net and Supplier to explain how the
normalization was performed on each Comparator in the Representative Sample and
will provide Health Net and Supplier the pre-adjustment and post-adjustment
Comparator data in a format customarily disclosed by the Benchmarker, to the
extent such data can be disclosed while preserving the confidentiality of the
Comparators. Each Party shall have the right to raise objections to the
normalization performed by the Benchmarker within twenty (20) days after such
meeting (the “Normalization Objection Period”), provided however that if Health
Net and Supplier in good faith are unable to agree upon a resolution of any such
objection within twenty (20) days after the conclusion of such Normalization
Objection Period, then the Benchmarker shall proceed as it deems appropriate in
its professional judgment and the benchmarking shall continue as described
below.

 

  (vi) Neither Health Net nor Supplier will be required to disclose to the
Benchmarker actual performance against Service Levels or other actual
performance comparison.

 

  (vii) During the thirty (30) day period after the Benchmarker completes the
data gathering, but before the Benchmarker has concluded the Benchmark analysis,
Health Net and Supplier will have an opportunity to consult with the Benchmarker
about how such data gathering activities conformed to the agreed Benchmark
process.

 

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  (viii)  Health Net and Supplier agree to participate jointly in all
discussions with the Benchmarker and to cooperate reasonably with the
Benchmarker in the benchmark activities; provided, however, in no event will
Supplier be required to provide the Benchmarker with Supplier data about
Supplier’s underlying actual costs and/or cost structure (unless the charges are
based on “cost-plus” or are for Managed As Pass-Through or Pure Pass-Through
pricing) or data from other Supplier customers.

 

  (ix) Health Net and Supplier agree that all information provided to or
obtained from the Benchmarker will be provided to both Health Net and Supplier,
unless otherwise agreed.

 

  (x) Health Net and Supplier agree that the benchmark will be conducted in a
manner that will not unreasonably disrupt either Party’s operations or
performance of the Services.

 

  (e) Representative Sample.

 

  (i) The Benchmarker shall compare the Charges under this Agreement for the
Services being benchmarked to the charges being incurred in a representative
sample of IT operations (as applicable and in accordance with the Benchmark
Process hereunder) by or for other outsourced entities that have outsourced
information technology services comparable to the Services to be benchmarked
(“Representative Sample”). “Comparator” shall mean an entity within the
Representative Sample.

 

  (ii) The Benchmarker shall select the Representative Sample from entities
identified by the ***.

 

  (iii) The Representative Sample shall include not less than ***, and may
include entities that are outsourcing customers of Supplier.

 

  (iv) The Representative Sample used by the Benchmarker for the Benchmark will
be reasonably current (generally based on services provided to Health Net and
the Comparators no more than eighteen (18) months prior to the start of the
Benchmark).

 

  (f)

Performance and Output of Benchmark. The Benchmarker is to conduct a
benchmarking as promptly as is prudent in the circumstances. At the conclusion
of the benchmarking process the Benchmarker shall issue an initial report of its
findings and conclusions to Health Net and Supplier no later than ninety
(90) days from the conclusion of the benchmark. Health Net and Supplier will
review the initial report and raise any issues with the Benchmarker regarding
such report within thirty (30) days following receipt (the “Review Period”). The
Benchmarker will review the issues and any materials provided by either Party
and will use reasonable efforts to resolve such issues with Health Net and
Supplier, provided that if Health Net and Supplier in good faith are unable to
agree upon a resolution of any issue within thirty (30) days after the
conclusion of the Review Period, then ***. Upon conclusion of the Review Period,
and discussion of issues (if any) raised by either Party within the thirty
(30) day period described in the prior sentence, the Benchmarker will submit a
final benchmark report, including any approved revisions (“Final Benchmarker

 

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Report”). Absent fraud, the Final Benchmarker Report shall be final and binding
on the Parties.

 

  (g) Adjustments Based on Final Benchmarker Report.

 

  (i) The Benchmarker shall determine if Health Net’s Charges fall within the
top quartile, as calculated using the MSExcel “QUARTILE” Function as (viewed
from the perspective most favorable to Health Net) of charges in the
Representative Sample for each benchmarked Service Tower (“Benchmark Level”).

 

  (ii) If in the Final Benchmarker Report, the aggregate Charges to Health Net
under this Agreement for the Service Tower that is the subject of the benchmark
are higher than the Benchmark Level for such Service Tower, and the difference
between the Benchmark Level and the current Contract Year’s aggregate Charges
for the benchmarked Service Tower that were in effect as of the Effective Date
is equal to, or less than ***

 

  (iii) If in the Final Benchmarker Report, the Charges to Health Net under this
Agreement for the Service Tower that is the subject of the benchmark is in the
aggregate higher than the Benchmark Level for such Service Tower, and the
difference between the Benchmark Level and the aggregate Charges for the
benchmarked Service Tower are greater than the *** then Supplier will ***reduce
such Charges for such Services Tower for the remainder of the Term to bring the
Charges for such benchmarked Service Tower within *** without requiring
modifications to any Service Levels or other terms under this Agreement; subject
to the following limitations (“Benchmarking Adjustment Caps”), unless otherwise
agreed:

 

  (A) Supplier shall not be required to reduce the aggregate Charges for a
benchmarked Service Tower that is one of the IT Towers pursuant to this
Section 9.4 following any individual benchmark or multiple benchmarks by more
*** the Charges that were in effect as of the Effective Date for such Services
Tower in a Contract Year; and in no event shall the total of any and all
adjustments to the Charges for all benchmarks that are performed on all IT
Towers in aggregate exceed *** the total Charges for all IT Towers that were in
effect as of the Effective Date for any Contract Year; and

 

  (B) Supplier shall not be required to reduce the aggregate Charges for a
benchmarked Service Tower that is one of the Network Towers pursuant to this
Section 9.4 following any individual benchmark or multiple benchmarks by more
than *** of the Charges that were in effect as of the Effective Date for such
Services Tower in a Contract Year.

 

  (C) The IT Towers and Network Towers for purposes of benchmarking are separate
and distinct; a benchmark in one pool shall have no effect on the calculation or
adjustment limitations on the other.

 

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  (D) The Benchmark Adjustment Caps shall be calculated separately for each
Contract Year of the Term. For example, ***.

 

  (E) ***

 

  (iv) In addition, and without limiting Supplier’s obligation under
Section 9.4(g)(iii) above, if following each individual benchmark of a Service
Tower an adjustment in excess of one (or if applicable, both) Benchmarking
Adjustment Caps is required to bring the Charges for such Service Tower within
the Benchmark Deadband, and Supplier is unwilling to make such adjustment for
the portion in excess of the applicable Benchmarking Adjustment Cap(s), then
Health Net may terminate the affected benchmarked Service Tower (including the
applicable portion of the Cross Tower Services Tower) by providing Supplier at
least ninety (90) days notice and paying the Wind Down Costs and Balance Sheet
Items for such Service Tower as set forth in Schedule C (Charges); provided that
if a Service Tower to be terminated is a Network Tower, Health Net shall
terminate all Service Towers that are Network Towers (rather than terminate one
Network Tower but not the other Network Tower).

 

  (v) Any changes made to the Charges pursuant to a Benchmark will take effect
on a prospective basis thirty (30) days following the Benchmarker’s delivery of
the Final Benchmark Report.

 

10. INVOICING AND PAYMENT

 

  10.1 Invoicing

 

 

(a)

Supplier shall invoice Health Net for all amounts due under this Agreement on a
monthly basis as follows: Supplier shall submit two (2) invoices to Health Net
by the tenth (10th) day of each month. The first invoice shall include the
Annual Services Charge for the current month (“ASC Invoice”); the second invoice
shall include ARCs and RRCs, Managed As Pass-Through Expenses, Pure Pass-Through
Expenses and any other Charges payable under this Agreement for Services
delivered in the prior month (“Variable Charge Invoice”). Each invoice shall,
for each charge on the invoice, cite the specific section of the Agreement on
which such charge is based. Supplier shall include the calculations utilized to
establish the Charges.

 

  (b) To the extent a credit may be due Health Net pursuant to this Agreement,
Supplier shall provide Health Net with an appropriate credit against amounts
then due and owing. If no further payments are due to Supplier, Supplier shall
pay such amounts to Health Net within thirty (30) days.

 

  (c)

Supplier shall render a consolidated ASC Invoice and consolidated Variable
Charge Invoice for each month’s Charges showing such details as reasonably
specified by Health Net, including as necessary to satisfy Health Net’s internal
accounting and chargeback requirements (such as allocating charges among Service
components, locations and departments). The approved form of invoice as of the
Effective Date is attached as Exhibit C-7 to Schedule C (“Form Invoice”). Any
changes to such Form Invoice must be approved by Health Net. Supplier agrees
that it shall maintain the chargeback capability and processes that

 

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Health Net has in place as of the Effective Date. Charges for Services relating
to Health Net’s Federal Services business shall be separately identifiable on
each invoice.

 

  (d) Each month’s invoices shall be complete as to the Charges for such month,
except as provided in the remainder of this Section. Supplier may not charge
Health Net any additional amounts for a month for which an invoice has been
rendered more than *** after such additional amounts should have been invoiced
pursuant to Section 10.1(a), except:

 

  (i) With respect to Managed As Pass-Through Expenses, Supplier may include
such Managed As Pass-Through Expenses on a later invoice, although in no event
shall any such expenses be billed more than *** after such expense was due and
payable to the third party vendor; and

 

  (ii) With respect to charges for Services rendered by AT&T to Health Net,
Supplier may include such AT&T invoice amounts on a later invoice, although in
no event shall these be billed more than *** after such amounts should have been
invoiced pursuant to Section 10.1(a).

 

  (iii) With respect to the expenses and charges described in Section 10.1(d)(i)
and Section 10.1(d)(ii) above, Supplier shall use Commercially Reasonable
Efforts to bill such amounts sooner than the time permitted under such Sections.
Supplier shall notify Health Net if Supplier is unable to bill any such expense
or charge prior to the due date of such expense or charge, including due to a
failure to receive the invoice from the third party vendor. For clarity,
(A) this Section 10.1(d)(iii) shall not apply to Pure Pass-Through Expenses, and
(ii) if Supplier satisfies the conditions set forth in this Section and is still
unable to provide the invoice for any Managed As Pass-Through Expense item prior
to the due date for such item, then Supplier shall be relieved from the
limitations set forth in Section 10.1(d)(i) above with respect to such Managed
As Pass-Through Expense item, but not the limitations set forth in
Section 10.1(d)(ii) above with respect to AT&T charges.

 

  (e) All charges shall be invoiced and payable in U.S. currency in accordance
with the charges set forth in the applicable pricing schedule. Supplier shall
bear any and all currency fluctuation risks inherent in its election to provide
elements of the Services from offshore locations.

 

  10.2 Payment Due

Subject to the other provisions of this Section 10, invoices provided for under
Section 10.1 and properly submitted to Health Net by the tenth (10th ) day of
the month pursuant to Section 10.1 and other terms of this Agreement shall be
due and payable by Health Net twenty (20) days following receipt for the ASC
Invoice and thirty (30) days following receipt for the Variable Charge Invoice
(each a “Payable Date”). Any amount due under this Agreement for which a time
for payment is not otherwise specified shall be due and payable within *** days
after receipt of a proper invoice for such amount. If any undisputed payments or
portions thereof payable under this Agreement are not received by Supplier
within five (5) business days after the Payable Date, (a) Supplier shall
promptly notify Health Net of the non-payment; and (b) Health Net shall pay
Supplier simple (non-compounded) interest on the unpaid amounts for each day
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and including the sixth (6th) day after the Payable Date and the date Supplier
receives such unpaid amounts at a rate equal to the lesser of: (i) eighteen
percent (18%) per annum; or (ii) the maximum amount permissible by applicable
law.

 

  10.3 Accountability

Supplier shall maintain complete and accurate records of and supporting
documentation for the amounts billable to and payments made by Health Net
hereunder. Supplier agrees to provide Health Net with documentation and other
information with respect to each invoice as may be reasonably requested by
Health Net to verify accuracy and compliance with the provisions of this
Agreement.

 

  10.4 Proration

Except as may be otherwise provided in this Agreement, periodic charges under
this Agreement are to be computed on a calendar month basis, and shall be
prorated for any partial month.

 

  10.5 Refundable Items

 

  (a) Prepaid Amounts. Where Health Net has prepaid for a service or Function
for which Supplier is assuming Financial Responsibility under this Agreement,
Supplier shall refund to Health Net, upon either Party identifying the
prepayment, that portion of such prepaid expense which is attributable to
periods on and after the Effective Date.

 

  (b) Refunds and Credits. If Supplier should receive a refund, credit or other
rebate for goods or services previously paid for by Health Net, Supplier shall
promptly notify Health Net of such refund, credit or rebate and shall promptly
pay the full amount of such refund, credit or rebate, as the case may be, to
Health Net.

 

  10.6 Deductions

With respect to any amount to be paid by Health Net hereunder, Health Net may
deduct from such amount any amount that Supplier is obligated to pay Health Net
hereunder.

 

  10.7 Disputed Charges

 

  (a) Subject to Section 10.6, Health Net shall pay undisputed charges when such
payments are due under this Section 10 and Schedule C. Subject to
Section 10.7(b), Health Net may withhold and/or set off payment of particular
charges that Health Net disputes in good faith (“Disputed Charges”), and may set
off amounts due and owing to Health Net as credits against charges payable to
Supplier under this Agreement. If any such Disputed Charges have already been
paid, Health Net may deduct such Disputed Charges from future amounts owed by
Health Net to Supplier. If an invoiced amount is disputed in good faith by
Health Net, then Health Net shall provide written notification to Supplier of
the dispute and the basis for such dispute, and the Parties shall utilize the
procedures in Section 26.1 to resolve the issue. In the event that charges cover
both disputed and undisputed items, Health Net shall pay all undisputed items in
accordance with this Agreement.

 

  (b)

The maximum Disputed Charges Health Net may withhold pursuant to Section 10.7(a)
at any time under this Agreement shall not in the aggregate

 

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exceed an amount equal to Supplier’s charges for the Services (excluding Managed
As Pass-Through Expenses and Pure Pass-Through Expenses) under this Agreement
for the *** full calendar months immediately preceding such time (the “Disputed
Charges Cap”). Health Net shall pay Supplier any Disputed Charge in excess of
the Disputed Charges Cap without prejudice to any and all rights to contest
Supplier’s entitlement to such Disputed Charge.

 

11. TRANSFER OR USE OF RESOURCES

 

  (a) This Section 11 sets forth the processes by which certain resources used
by Health Net prior to the Effective Date will be transferred or otherwise made
available to Supplier for use in providing the Services. RIGHTS OF USE GRANTED
BY HEALTH NET TO SUPPLIER UNDER THIS SECTION 11 ARE GRANTED ON AN ‘AS-IS,
WHERE-IS’ BASIS, WITHOUT WARRANTIES OF ANY KIND.

 

  (b) Schedule S (Asset Responsibility Matrix) sets forth the Financial
Responsibility Model. For each intersection that is designated in Schedule S as
Supplier’s Financial Responsibility, the Charges compensate Supplier for
providing the applicable function or resource, and Health Net shall not be
required to pay Supplier any amounts in addition to the Charges for such
function or resource. For each intersection that is designated in Schedule S as
Health Net’s Financial Responsibility, Health Net is required to pay for such
function or resource in addition to the Charges (i.e., to Supplier for payment
to a third party on a Managed As Pass-Through Expense or Pure Pass-Through
Expense basis, directly to a third party, or to Supplier in addition to the
Charges under this Agreement).

 

  11.2 Transfer of Personnel

Schedule E (Transitioned Employees) provides general terms and conditions
governing the recruitment and transition of certain existing Health Net
personnel to Supplier.

 

  11.3 Health Net Owned Equipment

 

  (a) “Health Net Owned Equipment” means Equipment owned by Health Net (or a
Health Net Affiliate) that is to be either sold to Supplier or made available to
Supplier for use in providing the Services. The Health Net Owned Equipment is
listed or described in Schedule N (Equipment).

 

  (b) Beginning as of the Effective Date, Health Net shall have the option to
sell, and upon the exercise of such option, Supplier shall purchase, the Health
Net Owned Equipment so designated in Exhibit N-1 to Schedule N (Equipment) at a
purchase price equal to Fair Market Value as of the month immediately preceding
the date of sale of the Equipment. The purchase price and the Health Net Owned
Equipment to be sold shall be subject to adjustment pursuant to Section 11.1 of
Schedule C (Charges). The sale shall occur on the date set forth in Health Net’s
notice to Supplier, provided Health Net shall give Supplier not less than thirty
(30) days written notice prior to the effective date of such sale. The Parties
will execute a Bill of Sale in the form set forth as Schedule T (Bill of Sale)
to evidence the conveyance. The aggregate purchase price will be set forth in
the Bill of Sale.

 

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  (c) As of the Effective Date, Health Net grants to Supplier, without sale, the
right to use the Health Net Owned Equipment listed in Exhibit N-3 to Schedule N
(Health Net Equipment) during the Term during its remaining useful life until,
for each item of Equipment, the earlier of (i) the date the applicable Equipment
is sold to Supplier pursuant to Section 11.3(b) of the General Terms and
Conditions; (ii) the date Supplier is required to refresh such Equipment in
accordance with the Agreement; (iii) the cessation or termination of the
applicable Services; or (iv) the expiration of the Term. After such time that
Health Net is obligated to make such Health Net Owned Equipment available to
Supplier, then Supplier shall be responsible for replacing such asset in
accordance with Section 12.2(a).

 

  (d) When any Health Net Owned Equipment not purchased by Supplier is no longer
required for performance of the Services, and in any event upon the earlier of
(i) the date the Equipment is sold to Supplier pursuant to Section 11.3(b);
(ii) the date Supplier is required to refresh such Equipment; (iii) the
cessation or termination of the applicable Services; or (iv) the expiration of
the Term, Supplier will return such Equipment to Health Net in substantially the
same condition it was when Supplier began use of it. Supplier will be
responsible for damage to the Health Net Owned Equipment caused by Supplier
Personnel, subject to reasonable wear and tear.

 

  11.4 Health Net Leased Equipment

 

  (a) “Health Net Leased Equipment” means Equipment leased by Health Net (or a
Health Net Affiliate) that is to be made available to Supplier for use in
providing the Services. The Health Net Leased Equipment is listed or described
as such in Schedule N (Equipment).

 

  (b) Subject to Supplier having obtained any Required Consents pursuant to
Section 11.11 (Required Consents), as of the Effective Date, Health Net assigns
to Supplier, and Supplier accepts assignment of, the leases for the Health
Net-leased equipment designated as Assumed in Schedule N-2 (Equipment). Supplier
will comply with the duties imposed on Health Net by such leases.

 

  (c) As of the Effective Date, Health Net grants to Supplier, without
assignment of the lease and solely for the purpose of providing the Services,
the right to use the Health Net Leased Equipment listed or described in Exhibit
N-4 to Schedule N (Equipment) during the Term (or the applicable lease term, if
shorter) solely to perform the Services. Until the earlier of (A) the date
Supplier is required to refresh such Equipment in accordance with Exhibit A-1 to
Schedule A of the Agreement, (B) the cessation or termination of the applicable
Services, or (C) the end of the applicable lease term, Supplier will comply with
the duties imposed on Health Net by the leases for such equipment that have been
disclosed to Supplier. After such time that Health Net is obligated to make such
Health Net Leased Equipment available to Supplier, then Supplier shall be
responsible for replacing such asset in accordance with Section 12.2(a).

 

  (d)

When any Health Net Leased Equipment is no longer required for performance of
the Services, and in any event until the earlier of (A) the date Supplier is
required to refresh such Equipment; (B) the cessation or termination of the
applicable Services; or (C) the end of the applicable lease term, Supplier will

 

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return it to Health Net in substantially the same condition it was in when
Supplier began use of it. Supplier will be responsible for damage to the Health
Net Leased Equipment caused by Supplier Personnel, subject to reasonable wear
and tear.

 

  11.5 Health Net Third Party Service Contracts

 

  (a) “Health Net Third Party Service Contracts” means third party service
contracts of Health Net (or a Health Net Affiliate) that are to be assigned or
made available to Supplier for use in providing the Services. The Health Net
Third Party Service Contracts are listed in Schedule I (Health Net Third Party
Service Contracts).

 

  (b) Subject to the Parties having obtained any Required Consents pursuant to
Section 11.11 (Required Consents), as of the Effective Date, Health Net assigns
to Supplier, and Supplier accepts assignment of, the Health Net Third Party
Service Contracts so designated as Assumed in Exhibit I-1 to Schedule I (Health
Net Third Party Service Contracts). Supplier will comply with the duties imposed
on Health Net by such Health Net Third Party Service Contracts. Health Net
intends to assign the Health Net Third Party Service Contracts to the Supplier,
to the extent possible. If it is not possible to assign to the Supplier any
Health Net Third Party Service Contracts designated as Assumed in Exhibit I-1 to
Schedule I as of the Effective Date, then such Third Party Service Contracts
shall be treated as Managed in ASC.

 

  (c) Subject to Section 11.5(d), Health Net grants to Supplier, without
assignment of such contract, but subject to the Parties obtaining any Required
Consents pursuant to Section 11.11, the right to use the services provided to
Health Net under the other Health Net Third Party Service Contracts listed or
described as Managed in ASC, Managed As Pass-Through and Retained in Exhibits
I-2, I-3 and I-4, respectively to Schedule I (Health Net Third Party Service
Contracts) during the applicable contract term solely as necessary to perform
the Services. Supplier will comply with the duties imposed on Health Net by the
Health Net Third Party Contracts that have been disclosed to Supplier.

 

  (d) When Health Net Third Party Service Contracts are no longer required for
performance of the Services, and in any event upon the earlier of (i) the time
period set forth in Exhibits I-2, I-3, I-4, and I-5 respectively to Schedule I
and described in Section 3 of Schedule S relating to the period that Health Net
is obligated to make such Third Party Service Contracts available to Supplier to
provide the Services, or (ii) the cessation or termination of the applicable
Services, or (iii) the end of the applicable contract term, Supplier will cease
use of such Health Net Third Party Service Contracts. After such time that
Health Net is obligated to make such Health Net Third Party Service Contract
available to Supplier, including as may be designated in Schedule I, then
Supplier shall be responsible for replacing such asset in accordance with
Section 12.3(a) or the asset will be moved into the Managed in ASC category, as
set forth in Section 3 of Schedule S.

 

  11.6 Health Net Owned Software

 

  (a)

“Health Net Owned Software” means Software owned (i.e., in which the copyright
is owned) by Health Net (or a Health Net Affiliate) that is to be made

 

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available to Supplier for use in providing the Services. The Health Net Owned
Software includes the Software listed or described as such in Exhibit J-3 to
Schedule J (Software). Supplier acknowledges that Schedule J (Software) contains
Health Net’s good faith list of the major items of Health Net Owned Software,
but that the Health Net Owned Software may include additional Software that is
not listed or described in Schedule J ( Software).

 

  (b) Health Net (and each of its Affiliates) retains all of its right, title
and interest in and to the Health Net Owned Software. As of the Effective Date,
Health Net grants to Supplier a fully paid-up, nonexclusive license during the
Term to Use the Health Net Owned Software solely to perform the Services. The
Health Net Owned Software will be made available to Supplier in object code form
(and, at Health Net’s election, Source Code form) in an agreed format, together
with available documentation and other related materials. Supplier is not
permitted to Use Health Net Owned Software for the benefit of any entity other
than Health Net (and other Service Recipients under this Agreement) without the
prior written consent of Health Net, which may be withheld in Health Net’s
discretion.

 

  (c) When Health Net Owned Software is no longer required for performance of
the Services, or in any event upon the earlier of (i) the cessation or
termination of the applicable Services, or (ii) the expiration of the Term,
Supplier will return such Software to Health Net in an agreed format or, at
Health Net’s election, destroy it and certify the destruction of all copies in
Supplier’s (or any of its Subcontractor’s) possession or control.

 

  11.7 Health Net Licensed Software

 

  (a) “Health Net Licensed Software” means Software owned (i.e., in which the
copyright is owned) by a party other than Health Net (or a Health Net Affiliate)
that is licensed by Health Net (or a Health Net Affiliate) and is to be assigned
or made available by Health Net to Supplier for use in providing the Services.
Health Net Licensed Software includes the Software listed or described as such
in Schedule J (Software).

 

  (b) Subject to the Parties having obtained any Required Consents pursuant to
Section 11.11 (Required Consents), as of the Effective Date, Health Net assigns
to Supplier, and Supplier accepts assignment of, the Health Net Licensed
Software designated as Assumed in Exhibit J-1-1 to Schedule J, along with any
corresponding maintenance agreement. Supplier will comply with the duties
imposed on Health Net by such Health Net Licensed Software licenses and
maintenance agreements provided that if Health Net is not in compliance with the
terms and conditions of a Software license as of the Effective Date (e.g.,
excess users), Health Net shall be financially responsible for any charges under
such license to bring Health Net into legal compliance as of the Effective Date.
Supplier acknowledges certain of the Health Net Licensed Software may not be
receiving or eligible for maintenance or current in terms of fixes, patches and
versions, and notwithstanding such status of such licenses, Supplier shall
provide the Services in accordance with this Agreement, including Schedule A and
Schedule B, without additional compensation from Health Net.

 

  (c)

Subject to the Parties having obtained any Required Consents pursuant to
Section 11.11 (Required Consents), as of the Effective Date, Health Net grants
to

 

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Supplier, without assignment of the license, such rights during the Term (or the
applicable license term, if shorter) as Health Net has (or later obtains) to Use
the Health Net Licensed Software designated as Managed in ASC, Managed As
Pass-Through Expense and Retained in Exhibits J-1-2, J-1-3, and J-1-4,
respectively to Schedule J, solely to perform the Services. The Health Net
Licensed Software will be made available to Supplier in object code form (and,
at Health Net’s election, Source Code form) in an agreed format, together with
available documentation and other related materials. Supplier will comply with
the duties, including use and non-disclosure restrictions, imposed on Health Net
(or its Affiliate) by the licenses for the Health Net Licensed Software that
have been disclosed to Supplier. Supplier will not seek to modify or otherwise
revoke such terms.

 

  (d) When Health Net Licensed Software is no longer required for performance of
the Services or in any event upon the earlier of (i) the time period set forth
in Exhibits J-1-2, J-1-3, and J-1-4 to Schedule J and described in Section 3 of
Schedule S, relating to the period that Health Net is obligated to make such
Software available to Supplier to provide the Services, (ii) the cessation or
termination of the applicable Services, or (iii) the expiration of the Term,
Supplier will return such Software to Health Net in an agreed format or, at
Health Net’s election, destroy it and certify the destruction of all copies in
Supplier’s (or any of its Subcontractor’s) possession or control. After such
time that Health Net is obligated to make such Health Net Licensed Software
available to Supplier, then Supplier shall be responsible for replacing such
asset in accordance with Section 12.3(a), or the Asset will be moved into the
Managed in ASC category as set forth in Section 3 of Schedule S.

 

  (e) In addition, if Health Net assigns its license to any Software to Supplier
under this Agreement, then if requested by Health Net upon termination or
expiration of this Agreement, Supplier shall assign such Software back to Health
Net effective as of the date Supplier ceases to provide Services using such
license.

 

  11.8 Intentionally Omitted.

 

  11.9 Health Net Facilities

 

  (a) “Health Net Facilities” means facilities that are owned or leased by
Health Net (or a Health Net Affiliate) that are to be made available to Supplier
for use in providing the Services. Health Net Facilities are listed in
Schedule F (Facilities).

 

  (b) Subject to Health Net have obtained any Required Consents pursuant to
Section 11.11, Health Net grants to Supplier the right to access the Health Net
Facilities, to the extent permitted by applicable lease agreements, solely to
perform the Services until the earlier of (i) the cessation or termination of
the corresponding Service or (ii) the expiration of the Term. For Health Net
Facilities that are leased, Supplier will comply with the duties imposed on
Health Net (or its Affiliate) by each such lease.

 

  11.10 Terms Applicable to Health Net Facilities, Generally

 

  (a)

Except as otherwise provided in the Agreement, for Health Net Facilities, Health
Net retains responsibility for management and maintenance of the building and
property electrical systems, water, sewer, lights, heating, ventilation and air

 

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conditioning (“HVAC”) systems, physical security services and general
custodial/landscape services (including monitoring and maintaining the
uninterruptible power supply (“UPS”) system, air handlers and water chillers
that are primary support for the raised-floor environment in Health Net
Facilities).

 

  (b) Supplier is responsible for providing the other facilities and
facilities-related support it needs to provide the Services.

 

  (c) Health Net will inform Supplier of any plans or determination to relocate
the Health Net Facilities so that Supplier will have a reasonable amount of time
to prepare for and implement such relocation as it affects Supplier. Health Net
agrees to reimburse Supplier for Supplier’s Out-of-Pocket expenses incurred in
such relocation, subject to notice and prior approval by Health Net.

 

  (d) Supplier may use Health Net Facilities for the sole and exclusive purpose
of providing the Services, subject to Section 11.10(e). Any other uses are
subject to the prior approval of Health Net in its discretion. The use of Health
Net Facilities by Supplier does not constitute a leasehold or other property
interest in favor of Supplier.

 

  (e) Schedule F (Facilities) identifies the space at certain Health Net
Facilities that Supplier may use without charge to provide the Services. If
Supplier requires additional space at Health Net Facilities in order to provide
the Services, Health Net may require Supplier to reimburse Health Net for the
cost of space required for Supplier Personnel at Health Net Facilities.

 

  (f) Supplier will use the Health Net Facilities in an efficient manner and in
a manner that is coordinated and does not interfere with Health Net’s business
operations. If Supplier uses Health Net Facilities in a manner that
unnecessarily increases facility or other costs incurred by Health Net, Health
Net shall inform Supplier and Supplier shall use Commercially Reasonable Efforts
to immediately cease such uses. Unless otherwise agreed by the Parties, if
Supplier continues to use the Health Net Facilities in a manner that
unnecessarily increases facility or other costs incurred by Health Net after
notification by Health Net, then Health Net reserves the right to deduct such
excess costs from the amounts otherwise due Supplier. Supplier is responsible
for any damage to Health Net Facilities resulting from the abuse, misuse,
neglect or negligence of Supplier (or its Subcontractors or other guests) or
other failure to comply with its obligations under this Agreement respecting the
Health Net Facilities.

 

  (g) Supplier will keep the Health Net Facilities in good order, not commit or
permit waste or damage to them or use them for any unlawful purpose or act.
Supplier will comply with Health Net’s standard policies and procedures and with
applicable leases made available to Supplier regarding access to and use of the
Health Net Facilities, including procedures for the physical security of the
Health Net Facilities.

 

  (h) Supplier will permit Health Net and its agents and representatives to
enter any portions of the Health Net Facilities occupied by Supplier Personnel
at any time.

 

  (i)

Supplier may not make improvements or changes involving structural, mechanical
or electrical alterations to the Health Net Facilities without Health

 

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Net’s prior written approval. Any improvements to the Health Net Facilities will
become the property of Health Net.

 

  (j) When Health Net Facilities are no longer required for performance of the
Services, or in any event upon expiration or termination of this Agreement (or
the applicable lease term, if shorter), Supplier will return them to Health Net
in substantially the same condition as when Supplier began use of them, subject
to reasonable wear and tear.

 

  11.11  Required Consents

Supplier, with the cooperation of Health Net, is responsible for obtaining
Required Consents under any of the leases, contracts or licenses referred to in
Schedules I, J, and N. Supplier will pay any fees (such as transfer or upgrade
fees) required to obtain a Required Consent. Unless and until any Required
Consent has been obtained, Supplier will determine and adopt, subject to Health
Net’s prior approval, such alternative approaches as are necessary and
sufficient for Supplier to provide the Services without the Required Consent.

 

  11.12  Health Net Resources Provided to Supplier Personnel Working On-site

 

  (a) “On-site Health Net Resources” means the reasonable office space,
furniture, fixtures, computers, software, telephones, office supplies, and other
resources to be provided or made available by Health Net (or its Affiliates) to
Supplier Personnel assigned by mutual agreement of the Parties to work on-site
at facilities of Health Net (or its Affiliates).

 

  (b) Except as otherwise provided in this Agreement, Health Net will provide to
Supplier Personnel located and authorized to work on-site at Health Net
Facilities the reasonable use of On-site Health Net Resources substantially
equivalent to those made available by Health Net (or its Affiliate) to its own
personnel who perform similar functions; provided, however, that (i) Health Net
will not be responsible for providing any mobile or portable computing or
communications devices to Supplier Personnel except as otherwise provided in
item (ii) of this Section 11.12 or elsewhere in this Agreement; and (ii) Health
Net shall allow Transferred Employees who continue to work in Health Net
Facilities to continue using desktop and laptop computers that they used prior
to the Effective Date for the remainder of the useful life of such computers.

 

  (c) Supplier shall comply and cause Supplier Personnel to comply with Health
Net’s policies and procedures regarding access to and use of the On-site Health
Net Resources that have been disclosed to Supplier, including procedures for the
physical and logical security, and shall submit to periodic Health Net
compliance inspections and security audits.

 

  (d) Supplier will use the On-site Health Net Resources in an efficient manner
and for the sole purpose of providing the Services. Supplier will be responsible
for damage to the On-site Health Net Resources caused by Supplier Personnel.
When the On-site Health Net Resources are no longer required for performance of
the Services, Supplier will return them to Health Net in substantially the same
condition as they were in when Supplier began use of them, subject to reasonable
wear and tear.

 

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12. RESOURCE ACQUISITIONS DURING THE TERM

 

  12.1 General Responsibility and Compatibility

 

  (a) Except for any resources for which Health Net has Financial Responsibility
pursuant to this Agreement, Supplier is solely responsible (and has Financial
Responsibility) for providing all Equipment, Software, facilities, personnel,
third party services and other resources required to perform and render the
Services in accordance with this Agreement.

 

  (b) Supplier shall provide the Services using tools and processes that are
compatible with those used by Health Net and its other service providers to
provide other information technology services within the Health Net environment.
This includes implementing and maintaining interfaces with Health Net and other
service provider problem management, change control, and configuration
management systems to the extent required to maintain such compatibility.

 

  12.2 Equipment

 

  (a) For the Equipment owned or leased by Health Net existing as of the
Effective Date, the Parties’ respective responsibilities are set forth in
Schedules N and S. Supplier shall have Financial Responsibility and Operational
Responsibility for (i) additional Equipment that is needed or introduced by
Supplier in order to provide the Services, including modifications, upgrades,
enhancements, additions and replacements of Equipment, as necessary or
appropriate to render the Services in compliance with this Agreement, and
(ii) installation, operation, maintenance and refresh of such Equipment, except
in those cases in which this Agreement designates Health Net as having Financial
Responsibility for such Equipment (in which case the Parties’ respective
responsibilities are set forth in Schedules N and S). Supplier will acquire such
Equipment in the name of Supplier unless such Equipment is a modification,
upgrade, enhancement or replacement of existing Equipment owned by Health Net or
leased in Health Net’s (or its Affiliate’s) name, or it is Equipment for which
Health Net has Financial Responsibility under this Agreement, and in such cases
the Equipment shall be acquired in accordance with Section 12.1(b). Unless
approved otherwise by Health Net, the agreements under which the additional
Equipment used primarily to provide the Services is acquired by Supplier will
permit Supplier to assign the agreements to Health Net if Supplier ceases to
provide to Health Net the Services with respect to which Supplier acquires the
additional or replacement Equipment

 

  (b)

In the case of any Equipment used in the provision of Services for which Health
Net has Financial Responsibility, Health Net may either acquire the Equipment
itself or have Supplier acquire the Equipment on Health Net’s behalf, acting as
Health Net’s purchasing agent. In the latter case, Supplier will acquire the
Equipment in the name of Health Net at the lowest price available to Supplier.
When acquiring Equipment for Health Net under this paragraph, Supplier will
extend to Health Net the benefit of any volume purchase discounts available to
Supplier unless Supplier is precluded from doing so by the terms of its
arrangement with the applicable supplier. Any Equipment acquired pursuant to
this paragraph will be made available to Supplier in the manner described in
Section 11.3 (Health Net Owned Equipment) or Section 11.4 (Health Net Leased

 

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Equipment), as applicable. Other than Equipment purchased by Health Net as part
of the Hardware Services Charge pursuant to Section 6 of Schedule C, the cost of
Equipment incurred by Supplier when acting as Health Net’s purchasing agent will
be treated on an Out of Pocket Expense basis.

 

  12.3 Third Party Services

 

  (a) Supplier is responsible, at its expense, for acquiring additional third
party services as necessary or appropriate to render the Services in compliance
with this Agreement, except in those cases in which this Agreement designates
Health Net as having Financial Responsibility for services under a particular
Third Party Service Contract designated as Managed As Pass-Through or Retained.
Supplier will contract for such third party services in its own name unless they
will be provided under (i) a modification of an existing third party services
contract designated as Managed in ASC; or (ii) a Third Party Service Contract
designated as a Managed As Pass-Through Expense or Retained item for which
Health Net has Financial Responsibility under this Agreement (and in the case of
(ii), the services will be acquired in accordance with Section 12.2(b)).

 

  (b) In the case of any third party services used in the provision of Services
under a Third Party Services Contract for which Health Net has Financial
Responsibility as a Managed As Pass-Through or Retained contract, Health Net may
either contract for the services itself or have Supplier contract for the
services on Health Net’s behalf, acting as Health Net’s purchasing agent. In the
latter case, Supplier will contract for the services in Health Net’s name at the
lowest price available to Supplier. When acquiring third party services for
Health Net under this paragraph, Supplier will extend to Health Net the benefit
of any volume purchase discounts available to Supplier unless Supplier is
precluded from doing so by the terms of its arrangement with the applicable
supplier. Any third party services acquired pursuant to this paragraph will be
made available to Supplier in the manner described in Section 11.5 (Health Net
Third Party Service Contracts). The third party service provider’s charges under
any third party service contracts acquired by Supplier when acting as Health
Net’s purchasing agent will be treated as an Out of Pocket Expense.

 

  12.4 Software

 

  (a) For the Software products owned or licensed by Health Net existing as of
the Effective Date, the Parties’ respective responsibilities are set forth in
Schedules J and S. Software products existing as of the Effective Date, but not
identified on Schedule J shall be added to Schedule J and the Parties’
respective responsibilities shall be determined in accordance with Exhibit C-10.

 

  (b) For Software products acquired after the Effective Date, Supplier shall
have Financial Responsibility for additional Systems Software products that
Supplier reasonably deems necessary, or that is introduced by Supplier, in order
to provide the Services. Health Net shall have Financial Responsibility for
additional database management System Software (e.g., Oracle, SQL, Sybase),
middleware, Oracle Software, Software for Desktop Workstations or Laptop
Workstations, and Applications Software products requested by Health Net.

 

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  (c) Supplier shall have Operational Responsibility for all Software under this
Agreement (other than Software categorized as Pure Pass-Through), including the
installation, operation, support, and maintenance of such Software Managed As
Pass-Through.

 

  (d) Supplier will acquire such Software described in (a) and (b) above in its
own name unless (i) such Software is a modification, upgrade, enhancement, or
replacement of Software existing as of the Effective Date which was licensed in
Health Net’s (or its Affiliate’s) name, or (ii) it is Software for which Health
Net has Financial Responsibility under this Agreement as a Managed As
Pass-Through or Retained contract (and in the case of either (i) or (ii), such
Software shall be acquired in accordance with Section 12.3(b)). Unless approved
otherwise by Health Net, the licenses under which the additional Software is
acquired by Supplier will permit Supplier to assign the licenses to Health Net
if Supplier ceases to provide to Health Net the Services with respect to which
Supplier acquires additional or replacement Software.

 

  (e) In the case of any Software used in the provision of Services for which
Health Net has Financial Responsibility as a Managed As Pass-Through or Retained
item or described in Section 12.4(d)[(a)(i) or (ii)] above, Health Net may
either acquire the Software licenses itself or have Supplier acquire the
Software licenses on Health Net’s behalf, acting as Health Net’s purchasing
agent. In the latter case, Supplier will acquire the Software in Health Net’s
name at the lowest price available to Supplier. When acquiring Software for
Health Net under this paragraph, Supplier will extend to Health Net the benefit
of any volume purchase discounts available to Supplier unless Supplier is
precluded from doing so by the terms of its arrangement with the applicable
supplier. Any Software acquired pursuant to this paragraph will be made
available to Supplier in the manner described in Section 11.7 (Health Net
Licensed Software). The cost of the Software incurred by Supplier when acting as
Health Net’s purchasing agent will be treated on an Out of Pocket Expenses
basis. Additionally, Supplier shall install, operate and support (and otherwise
treat in the same manner as Software existing as of the Effective Date)
additional third party Applications Software and Systems Software that Health
Net may designate from time to time during the Term.

 

  12.5 Network Connectivity

Supplier shall be Financially Responsible for providing network connectivity
between facilities necessary to provide the Services, including connectivity
from Health Net Facilities or Health Net’s outsourcing vendor facilities to
Supplier’s facilities, onshore and offshore. The Parties shall work together to
determine the bandwidth, access, security and other requirements for such
network connectivity.

 

  12.6 Health Net Approval of Certain Resource Acquisitions

If Health Net is Financially Responsible for any resource acquired by Supplier
under this Agreement, or if any resource is to be acquired by Supplier pursuant
to a written contract (e.g., an equipment lease, a services agreement or a
software license) in the name of Health Net or its Affiliate, Supplier will
obtain Health Net’s prior written approval of the terms on which the resource is
acquired, including the terms of any associated contract.

 

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  12.7 Health Net Rights to certain Software upon Termination/Expiration

 

  (a) Software for which Health Net has Financial Responsibility. Upon
expiration or termination of this Agreement, or any portion thereof, Health Net
shall have license rights to Software which Supplier is obligated to obtain in
Health Net’s name under Section 12.4(e).

 

  (b) Supplier-owned Software.

 

  (i) Commercially Available Supplier Software.

 

  (A) With respect to Supplier Software used to provide the Services that is
Commercially Available, Supplier (on behalf of itself and those Supplier
Affiliates that own any such Software) grants to Health Net for use upon
termination or expiration of this Agreement, or termination of the Service(s)
for which such Software was used, a license for Health Net, its Affiliates, and
its designees (solely to provide services to Health Net, its Affiliates and
Service Recipients comparable to the Services), to Use such Software, under the
then-current license terms made available by Supplier to its own comparable
commercial customers, including any restrictions or prohibitions on access to
Source Code for such Software, provided however that (1) if such then-current
terms do not grant Health Net rights to Use such Software in the same manner and
for the same purposes it was used under this Agreement prior to expiration or
termination of this Agreement, then such license shall be deemed to include such
additional rights of Use without additional charge; (2) if Health Net and
Supplier have an existing license agreement applicable to such Software, the
terms of such license agreement shall apply; and (3) the foregoing license grant
is subject to payment of periodic license charges for Supplier Software that
Supplier generally licenses on a periodic license charge basis (rather than a
one-time license fee basis), applicable to the period after the end of the
Disengagement Assistance Period. The foregoing license shall be provided at no
charge to Health Net, except for ongoing monthly, variable or periodic charges
which are ordinarily charges to licensees of such Software, for the period after
the Disengagement Assistance Period.

 

  (B)

Supplier will offer to provide to Health Net, generally available Upgrades,
maintenance, support and other services for such Supplier Software on Supplier’s
then-current standard terms and conditions for such services, which include
pricing not in excess of that customarily charged to Supplier’s other commercial
customers. If Health Net elects to receive such services, (1) Health Net shall
only be obligated to pay for such services to the extent applicable to the
period after the Disengagement Assistance Period; and (2) the charges for such
services will reflect that maintenance and support on such Software is current
(i.e., no “catch-up” or similar payments shall be required to be made by Health
Net because maintenance and support may have

 

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lapsed – if maintenance and support has lapsed, IBM shall pay charges necessary
to bring maintenance and support current).

 

  (ii) Non-Commercially Available Supplier Software.

 

  (A) Supplier shall not use any Non-Commercially Available Supplier Software to
provide the Services, without Health Net’s prior written consent, which consent
Health Net may withhold in its discretion.

 

  (B) Supplier (on behalf of itself and those Supplier Affiliates that own any
Non-Commercially Available Software described in this paragraph) (i.e. used to
provide the Services) grants to Health Net and its Affiliates (and designees
thereof for the sole purpose of providing Services to Health Net, its Affiliates
and Service Recipients), a perpetual (subject to Section (C) below), worldwide,
irrevocable, fully paid-up, non-exclusive license to Use Non-Commercially
Available Supplier Software used to provide the Services (including programmer
interfaces, available documentation, manuals and other materials necessary for
the use thereof) at the expiration or termination of this Agreement, or portion
thereof, for no charge to Health Net, provided that the foregoing license as it
applies to Supplier Proprietary Delivery Tools shall be subject to the next
paragraph. The Parties will mutually agree on applicable terms for Supplier’s
maintenance and support of such Software after such termination or expiration of
the Agreement; provided that (i) Health Net shall only be obligated to pay for
such maintenance and support for the period after the Disengagement Assistance
Period; and (ii) if Health Net elects, such Software maintenance and support
shall be done on a time and materials basis including using the professional
service rates for applicable skill sets set forth in Schedule C; and (iii) if
the Parties are not able to agree upon commercially reasonable terms for such
maintenance and support, then upon Health Net’s request, IBM shall provide
Health Net the Source Code for such Non-Commercially Available Supplier Software
and the license above shall be deemed to include the right to Use such Source
Code.

 

  (C)

If Supplier proposes to use a Supplier Proprietary Delivery Tool to provide the
Services and (i) Supplier procures Health Net’s prior written consent to use
such Supplier Proprietary Delivery Tool to provide the Services; and (ii) Health
Net retains a third party outsourcing provider to provide services comparable to
the Services after the termination or expiration of this Agreement and the
Disengagement Assistance Period; and (iii) Health Net proposes to permit such
third party outsourcing provider to use such Supplier Proprietary Delivery Tool,
then the license to the Non-Commercially Available Supplier Software that is a
Supplier Proprietary Delivery Tool granted pursuant to paragraph (B) above shall
be limited in term to one (1) year after the end of the Disengagement Assistance
Period. If Supplier

 

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fails to obtain Health Net’s written consent prior to using such tool to provide
Services, or if Health Net does not propose to make such tool available to any
other third party, then the license shall not be subject to the one year
limitation in term, but shall be perpetual.

 

  (D) “Supplier Proprietary Delivery Tool” shall mean a tool used by Supplier to
deliver the Services more efficiently and which is set forth on Exhibit J-2-3 to
Schedule J. If after the Effective Date, Supplier proposes to use an additional
Supplier Proprietary Delivery Tool that would be subject to the one year limit
on Health Net’s license to such tool as described in Section (C) above, Supplier
shall give written notice to Health Net identifying the proposed Supplier
Proprietary Delivery Tool, including the purpose of such tool, and information
about how such tool will be used to provide the Services. Supplier shall also
provide such additional information about such proposed Supplier Proprietary
Delivery Tool as Health Net may reasonably request. If Health Net consents to
the use of such proposed Supplier Proprietary Delivery Tool to provide the
Services, (i) Supplier may use such Supplier Proprietary Delivery Tool to
provide the Services; and (ii) the Parties shall update the list of Supplier
Proprietary Delivery Tools set forth on Exhibit J-2-3 to Schedule J with any
such mutually agreed additional Supplier Proprietary Delivery Tool.

 

  (c) Third Party Software.

 

  (i) Commercially Available Third Party Software.

Supplier shall not utilize Commercially Available third party Software to
provide the Services without Health Net’s prior written approval, which approval
Health Net may withhold in its discretion. Without limiting Health Net’s rights
under this Section: (A) as a condition to granting such consent, Health Net may
require Supplier to use Commercially Reasonable Efforts to obtain for Health
Net, a perpetual, non-exclusive license for Health Net and its Affiliates (and
their respective service providers) to Use such Commercially Available Software
at the expiration or termination of this Agreement (under the then-current
license terms made available by such third party Software vendor to comparable
commercial customers) and at no additional charge to Health Net, and (B) the
right for Health Net to obtain from such third party vendor a commercially
reasonable maintenance and support agreement for such Software, on terms
reflecting that maintenance and support on such Software is current (i.e., no
“catch-up” or similar payments shall be required to be made by Health Net
because maintenance and support may have lapsed – if maintenance and support has
lapsed, IBM shall pay charges necessary to bring maintenance and support
current) provided Health Net will be responsible for charges under such
maintenance and support agreement only with respect to the period after the
Disengagement Assistance Period. If Supplier nonetheless uses such Software
without obtaining Health Net’s prior written approval, then Supplier shall be
obligated to obtain the license and maintenance

 

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agreement described in the prior sentence at no additional charge to Health Net.

 

  (ii) Non-Commercially Available Third Party Software

Supplier shall not utilize any third party owned Software to provide the
Services that is not Commercially Available, without Health Net’s prior written
approval, which approval Health Net may withhold in its discretion. Without
limiting Health Net’s rights under this Section: (A) as a condition to granting
such consent, Health Net may require Supplier to use Commercially Reasonable
Efforts to obtain for Health Net, a perpetual, non-exclusive license for Health
Net and its Affiliates (and their respective service providers) to Use such
Non-Commercially Available third party Software to provide services similar to
the Services to Health Net and the Service Recipients, at no additional charge
to Health Net, and a commercially reasonable maintenance and support agreement
for such Software (and the charges under such maintenance agreement shall
reflect the fact that maintenance and support on such Software is current (i.e.,
no “catch-up” or similar payments shall be required to be made by Health Net
because maintenance and support may have lapsed – if maintenance and support has
lapsed, IBM shall pay charges necessary to bring maintenance and support
current), and (B) if Supplier nonetheless uses such Software without obtaining
Health Net’s prior written approval, then Supplier shall be obligated to obtain
the license and maintenance agreement described in the prior sentence at no
additional charge to Health Net; provided that if Health Net elects to receive
such maintenance and support, Health Net will be responsible for charges under
such maintenance and support agreement only with respect to the period after the
Disengagement Assistance Period. Such license shall be effective upon the
expiration or termination of the Agreement, or portion thereof.

 

  (d) AT&T Proprietary and Licensed Software. Notwithstanding anything to the
contrary, any Software that is owned or licensed by AT&T is not, and shall not
be deemed, licensed, sublicensed, assigned or transferred under any of the terms
of this Agreement, except that this Section 12.7 shall apply to Systems Software
that performs tasks basic to the functioning of, and that is embedded in,
Equipment that is sold or leased to Health Net. Supplier shall procure for
Health Net the licenses and rights set forth in this Section 12.7 with respect
to the Software described herein.

 

  (e)

Tracking Software used to provide the Services. Attached as Exhibits J-2-1,
J-2-2, J-2-4 and J-2-5 to Schedule J are lists of Software that Supplier intends
as of the Effective Date to use to provide the Services, which cover
(A) Supplier Software that is Commercially Available, (B) Supplier Software that
is Non-Commercially Available, (C) third party Software that is Commercially
Available, and (D) third party Software that is Non-Commercially Available.
Within fifteen (15) days after the end of each calendar quarter, Supplier shall
provide to Health Net an updated Exhibit showing any additional Software that
Supplier has added to provide the Services during such quarter (which shall be
identified as additional Supplier owned or third party owned, Commercially
Available or Non-Commercially Available Software and whether such Software has
one time or periodic license charges), provided that actual use of any such

 

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Software is subject to Health Net’s approval rights as set forth in Section 12.7
above. Upon approval by Health Net, such updated Exhibits shall be added to the
Agreement.

 

13. TRANSITION AND TRANSFORMATION

 

  13.1 “Transition” Defined

“Transition” means the process (and associated time period, starting on the
Effective Date) of transitioning responsibility for the Services from Health Net
to Supplier, transferring Transitioned Employees from Health Net to Supplier or
AT&T as required by Schedule E, and causing any required knowledge transfer from
Health Net personnel to Supplier Personnel.

“Transformation” means the process of migrating performance of the Services from
Health Net’s as-is operating environment to Supplier’s initial target
environment and making the initial planned improvements to the infrastructure
used to perform and deliver the Services.

 

  13.2 Supplier Solution Description and Transition Plan

 

  (a) As part of the process leading up to execution of this Agreement, Health
Net has communicated its near-term business requirements to Supplier. In
response, Supplier has proposed a high level ‘solution’ that describes how it
will provide the Services and meet Health Net’s business requirements. Health
Net expects that Supplier will continue to add detail and refine its solution
during contract negotiations. A detailed solution approved by the Parties will
be attached to the Agreement in Exhibit A-3 (Solution).

 

  (b) The Transition and Transformation shall be conducted in accordance with
written plans (the “Transition Plan” and the “Transformation Plan”) which shall
each include: (i) a description of the operations being transitioned and
transformed; (ii) a general description of the methods and procedures, personnel
and organization Supplier will use to perform the Transition and Transformation;
(iii) a schedule of Transition and Transformation activities; (iv) a detailed
description of the respective roles and responsibilities of Health Net and
Supplier; (v) such other information and planning as are necessary to conduct
the Transition and Transformation in accordance with the other terms in this
Agreement. Drafts of the Transition Plan as of the Effective Date are attached
to this Agreement as Exhibit A-2 and Exhibit A-4-1, and drafts of the
Transformation Plan as of the Effective Date are attached to this Agreement as
Exhibit A-3 and Exhibit A-4-2. References to the Transition Plan and the
Transformation Plan shall include their respective project plans. Supplier shall
be responsible for revising and finalizing the Transition Plan and
Transformation Plan, provided that: (A) Supplier shall cooperate and work
closely with Health Net in finalizing the plans (including incorporating Health
Net’s reasonable comments); and (B) all changes to the plans shall be subject to
approval by Health Net.

 

  (c) As part of the Transition and Transformation, Supplier will also assume
responsibility for completing the projects listed or described in Exhibit A-11
(In-Flight Projects), which are in progress as of the Effective Date and being
performed by resources that are being transferred or made available to Supplier
under this Agreement (the “In-Flight Projects”).

 

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  13.3 Conduct of the Transition and Transformation

Beginning on the Effective Date, Supplier will carry out and complete (1) the
Transition in accordance with the Transition Plan within one hundred eighty
(180) days after the Effective Date unless the Parties agree otherwise in
writing and (2) the Transformation in accordance with the Transformation Plan,
including tits time schedules. Except as otherwise expressly provided in the
Transition Plan or Transformation Plan, Supplier’s responsibilities with respect
to the Transition and Transformation include:

 

  (a) Performing and managing the Transition, Transformation and In-Flight
Projects and activities;

 

  (b) Establishing communications lines and network connections, and providing
Equipment, Software, tapes, records and supplies, as made necessary by the
Transition and Transformation;

 

  (c) Using Commercially Reasonable Efforts to conduct the Transition and
Transformation in a manner that minimizes interruption of Health Net’s business
operations;

 

  (d) Paying all costs associated with the Transition and Transformation,
including communications circuit costs (both installation/de-installation and
ongoing) except as otherwise expressly provided in this Agreement; and

 

  (e) Otherwise performing such migration tasks as are necessary to enable
Supplier to complete the Transition and Transformation and provide the Services.

 

  13.4 Health Net Cooperation and Support

Health Net will cooperate with Supplier in the conduct of the Transition and
Transformation and provide support as described in the Transition Plan and
Transformation Plan.

 

  13.5 Completion of Transition and Transformation

 

  (a) Health Net reserves the right to monitor, test and otherwise observe and
participate in the Transition and Transformation. Supplier will notify Health
Net without delay if any Health Net monitoring, testing or participation has
caused (or Supplier expects it to cause) a problem or delay in the Transition or
Transformation and work with Health Net to prevent or circumvent the problem or
delay.

 

  (b)

No functionality of Health Net’s as-is environment will be disabled until
Supplier demonstrates to Health Net’s reasonable satisfaction that the affected
processes and operations have been successfully migrated to Supplier’s target
environment and are functioning properly in that environment. Health Net may
require Supplier to stop proceeding with all or any part of the Transition or
Transformation if Health Net determines in good faith that such Transition or
Transformation, or any part of such Transition or Transformation, poses a risk
or hazard to Health Net’s business interests, provided that if Health Net
requires Supplier to stop all or any portion of the Transition or Transformation
and such requirement is not based on Supplier’s material failure to perform the
Services in accordance with this Agreement (including Services relating to the
Transition or

 

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Transformation), then such requirement shall be subject to the Change Control
Process, and further provided that the Parties shall negotiate such change in
good faith and in an expeditious manner.

 

  (c) If Supplier fails to either:

 

  (i) cease using the Health Net data center located in Rancho Cordova,
California (the “Rancho Data Center”) as a location from which Services are
provided (the “Rancho Service Cessation Obligation”), on or before September 30,
2009, or

 

  (ii) completely vacate such Rancho Data Center (the “Rancho Vacate
Obligation”), on or before October 31, 2009,

then commencing on October 1, 2009 (if the Rancho Service Cessation Obligation
is not satisfied on or before September 30, 2009) or if it is satisfied, then
commencing November 1, 2009 (if the Rancho Vacate Obligation is not satisfied on
or before October 31, 2009), and continuing for each calendar month or portion
of a calendar month thereafter that Supplier has not satisfied either the Rancho
Service Cessation Obligation or the Rancho Vacate Obligation, then Supplier
shall, subject to Section 8.3, grant Health Net a credit in the amount of ***.
If Health Net exercises its right to require Supplier to stop the Transition or
Transformation pursuant to Section 13.5(a), then the dates for completing the
Rancho Service Cessation Obligation and the Rancho Vacate Obligation set forth
in the preceding sentence shall be adjusted pursuant to the Change Control
Process, and Supplier’s obligations to pay the credit set forth in the preceding
sentence shall be based upon such adjusted dates.

 

14. DATA SECURITY AND PROTECTION

 

  14.1 “Health Net Data” Defined

“Health Net Data” means all data and information in any form (including data
stored on tape), whether or not Confidential Information, entered in Software or
Equipment, directly or indirectly, by or on behalf of Health Net or another
Service Recipient, including Derivative Works of such data and information
produced by or on behalf of Supplier.

 

  14.2 Health Net Data, Generally

As between the Parties, Health Net Data will be and remain the property of
Health Net. Supplier may not use Health Net Data for any purpose other than to
render the Services. No Health Net Data will be sold, assigned, leased or
otherwise disposed of to third parties or commercially exploited by or on behalf
of Supplier (or any of its Subcontractors). Neither Supplier nor any of its
Subcontractors may possess or assert any lien or other right against or to
Health Net Data. Without limiting the generality of the foregoing, Supplier may
only use personal identifying information as strictly necessary to render the
Services and must restrict access to such information to Supplier Personnel on a
strict need-to-know basis.

 

  14.3 Data Security

 

  (a) The Parties’ respective responsibilities for data and systems security are
as set forth in this Section 14 and in Schedule A (Services).

 

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  (b) When present at Health Net Facilities or accessing Health Net Data or
Health Net systems, Supplier will observe and comply with Health Net’s security
procedures that have been communicated to Supplier. Prior to performing Services
from the initial service location(s) or any new service location, Supplier shall
complete Health Net’s due diligence security questionnaire, which Health Net
shall provide upon request.

 

  (c) Supplier will implement and maintain the safeguards specified in Schedule
A, and otherwise required by Health Net policies and procedures with which
Supplier is required to comply under Section 5.4(c), to protect against the
destruction, loss or alteration of Health Net Data in the possession or control
of Supplier (or any of its Subcontractors). Health Net may keep backup Health
Net Data in its possession if it chooses and establish backup security for
Health Net Data. Supplier will document such safeguards in the Procedures
Manual.

 

  (d) Without limiting the generality of the foregoing:

 

  (i) Supplier will use Commercially Reasonable Efforts, including through
systems security measures, to guard against the unauthorized access, alteration
or destruction of Software and Health Net Data. Such measures will include the
installation of Software that: (A) requires all users to enter a user
identification and password prior to gaining access to the information systems;
(B) controls and tracks the addition and deletion of users; (C) controls and
tracks user access to areas and features of the information systems, and
(D) encrypts Health Net Data and Confidential Information that is stored on or
sent from Supplier Personnel personal computers.

 

  (ii) Supplier Personnel will not attempt to access, or allow access to, any
Health Net Data that they are not permitted to access under this Agreement. If
such access is attained, Supplier will immediately report such incident to
Health Net, describing in detail the accessed Health Net Data, and take all
necessary measures to stop the access, prevent recurrences, and return to Health
Net any copied or removed Health Net Data.

 

  14.4 Compliance with Data Privacy and Data Protection Laws, Regulations and
Policies

 

  (a) In carrying out its activities under this Agreement, each Party will
observe and comply with applicable data privacy and data protection Laws as
required by Section 27.5. In addition, when accessing or handling any Health Net
Data that contains personal identifying information, Supplier will comply with
Health Net’s policies that have been disclosed to Supplier relating to the use
and disclosure of such information as required by Section 5.4(c).

 

  (b)

The Parties hereby agree to the terms of the Business Associate Addendum
attached hereto as Schedule K (Business Associate Addendum), which is hereby
incorporated herein by reference. The Parties agree to comply with the terms of
such Business Associate Agreement. In the event of any conflict between the
terms of Section 21.2 and the terms and conditions of the Business Associate
Agreement, the terms and conditions that are more protective of the individually

 

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identifiable health information (as such term is defined in HIPAA) shall govern
to the extent of that conflict.

 

  14.5 Import/Export Controls

 

  (a) The Parties acknowledge that certain software and technical data exchanged
pursuant to this Agreement may be subject to import/export controls under the
Laws of the United States and other countries. Neither Party will import, export
or re-export any such items, any direct product of those items, or any technical
data in violation of applicable import/export control Laws.

 

  (b) Each Party will be responsible for compliance with import/export control
Laws with respect to any items it is deemed under such Laws to have imported or
exported, including responsibility for preparing and filing all required
documentation and obtaining all licenses, permits and authorizations required
for compliance. Each Party will cooperate with the other Party in that Party’s
efforts to comply with applicable import/export control Laws.

 

  (c) Supplier will include with copies of all Software provided to Supplier by
Health Net’s U.S.-based personnel that Supplier will use outside of the United
States documentation stating that “These commodities, technology or software
were exported from the United States in accordance with Export Administration
Regulations. Diversion or re-export contrary to U.S. law is prohibited.”

 

  14.6 Compliance with Gramm-Leach-Bliley (“GLB Act”)

 

  (a) “GLB Act” shall mean the Gramm-Leach-Bliley Act, 15 USC §6801 et. seq.,
and the implementing regulations and regulatory interpretations thereto, as
amended from time to time. Supplier acknowledges that Health Net is subject to
Title V of the GLB Act, pursuant to which Health Net is required to obtain
certain undertakings from Supplier with regard to the privacy, use and
protection of nonpublic personal financial information of Health Net’s customers
or prospective customers (“Health Net Non-public Data”). Therefore,
notwithstanding anything to the contrary contained in this Agreement and in
addition to (and not in substitution for) Supplier’s other obligations
hereunder, Supplier agrees that:

 

  (i) it will not disclose or use any Health Net Non-public Data except to the
extent necessary to carry out its obligations under this Agreement and for no
other purpose;

 

  (ii) it will not disclose Health Net Non-public Data to any third party,
including, without limitation, its third party service providers without the
prior consent of Health Net and an agreement in writing from the third party to
use or disclose such Health Net Non-public Data only to the extent necessary to
carry out Supplier obligations under this Agreement and for no other purposes;
and

 

  (iii) it will maintain, and will require all third parties approved under
Section 14.6(b) to maintain security in a manner that is consistent with the
requirements of this Agreement.

 

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  (b) The obligations set forth in this Section 14.6 will survive termination or
expiration of this Agreement. For purposes of this Agreement, Health Net
Non-public Data includes the nonpublic personal information (as defined in
15 USC §6809(4)) received by Supplier in connection with the performance of its
obligations hereunder, including (i) an individual’s name, address, e-mail
address, IP address, telephone number and/or social security number; (ii) the
fact that an individual has a relationship with Health Net; and (iii) an
individual’s account information. For the avoidance of doubt, Health Net
Non-public Data does not include (A) information collected from Health Net
employees (in their capacity as employees, and not as Health Net’s customers) by
Supplier for the purpose of administering and providing the Services, and
(B) nonpublic information collected from a source other than Health Net that has
been obtained on a non-confidential basis and which is not subject to the GLB
Act.

 

15. INTELLECTUAL PROPERTY RIGHTS

This Section 15 sets forth the Parties’ respective rights in Work Product and
other materials provided or created pursuant to this Agreement. As between the
Parties, the rights apply as set forth in this Section 15 whether the work in
question is performed solely by Supplier Personnel or by Supplier Personnel
working jointly with others.

 

  15.1 Defined Terms

 

  (a) “Intellectual Property Rights” means all intellectual and industrial
property rights recognized in any jurisdiction, including copyrights, mask work
rights, moral rights, trade secrets, patent rights, rights in inventions,
trademarks, trade names and service marks (including applications for, and
registrations, extensions, renewals, and re-issuances of, the foregoing).

 

  (b) “Independent IP” of a party (including a third party) means any Software,
documents, materials, processes and other works of authorship that either
(i) were created by or for the party prior to the Effective Date, or (ii) are
subsequently created by or for the party outside the scope of and independent
from this Agreement.

 

  (c) “Work Product” means any Deliverables, Software, documents, materials,
processes, business processes, business models, business rules, methods,
reports, documents, templates, studies, strategies, operating models, technical
architecture, design ware, Software objects, Software programs and programming,
program listings, programming tools, interfaces, source code, object code,
specifications, design documents and analyses, abstracts and summaries, software
configurations, test plans, scenarios, scripts, work and process flows, test
results, inventions, and other items produced by Supplier Personnel, whether
developed solely or jointly, in the course of performing the Services. A Work
Product is either a “New Work” – i.e., one that is not based upon any
preexisting works – or a “Derivative Work” – i.e., one that is based upon one or
more preexisting works.

 

  15.2 Independent IP

 

  (a) Except as otherwise expressly provided in this Agreement, including in
Section 15.2(b):

 

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  (i) as between the Parties, each Party will have and retain all of its right,
title and interest, including Intellectual Property Rights, in and to its
Independent IP and will be entitled to seek Intellectual Property Rights
protection for its Independent IP as it deems appropriate;

 

  (ii) a Party will not submit patent applications or otherwise seek to file for
or obtain Intellectual Property Rights protection with respect to or based upon
the other Party’s Independent IP without the other Party’s prior written
consent, which may be withheld at the other Party’s sole discretion;

 

  (iii) a Party will not be permitted to use the other Party’s Independent IP;
and

 

  (iv) ANY RIGHTS OF USE OF A PARTY’S INDEPENDENT IP GRANTED BY THIS AGREEMENT
ARE GRANTED ON AN ‘AS-IS, WHERE-IS’ BASIS WITHOUT EXPRESS OR IMPLIED WARRANTIES
OF ANY KIND.

 

  (b) Health Net’s ownership of Developed Material that incorporates any
Independent IP of Supplier or a third party shall be subject to Supplier’s or
such third party’s ownership of such Independent IP. In the case of Supplier
Independent IP incorporated into Developed Material, Supplier hereby grants to
Health Net and its Affiliates, and in the case of third party Independent IP
incorporated into Developed Material, Supplier shall procure for Health Net and
its Affiliates: a perpetual, irrevocable, non-exclusive, worldwide, paid-up
right and license to Use such Independent IP as part of the Developed Material,
and any Derivative Works of the Developed Material, in their businesses and to
authorize others to do the same on their behalf, for no additional charge. Any
representations, warranties, and covenants of Supplier, and any rights of Health
Net under this Agreement, that are applicable to Developed Material or a
Deliverable shall apply equally to any Independent IP of Supplier or a third
party incorporated into the Deliverable or Work Product. Supplier shall obtain
Health Net’s written approval prior to incorporating any Independent IP of
Supplier or a third party into Developed Material.

 

  (c) If Health Net provides any of its Independent IP to Supplier for use in
rendering the Services, Health Net grants to Supplier a fully paid-up,
nonexclusive license during the Term to Use such Independent IP and any
Developed Materials solely as necessary to perform the Services, and to
sublicense Approved Subcontractors to do the same on Supplier’s behalf. Supplier
may not Use Health Net’s Independent IP or Developed Materials for the benefit
of any entities other than Health Net (and its Service Recipients under this
Agreement) without the prior written consent of Health Net, which may be
withheld at Health Net’s discretion.

 

  15.3 Developed Materials

 

  (a) Subject to Section 15.2(b), Health Net will be the sole and exclusive
owner of all Intellectual Property Rights in and to any the following
(collectively, “Developed Material”):

 

  (i) all Deliverables; and

 

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  (ii) all Derivative Works of Independent IP owned or licensed by Health Net or
its Affiliates.

 

  (b) As between the Parties, Health Net will be the sole and exclusive owner of
the copyright in each Developed Material from the moment of its creation.
Developed Material will be deemed to be a ‘work made for hire’ under the
copyright Laws. Supplier hereby irrevocably conveys and assigns to Health Net,
without further consideration, all of Supplier’s right, title, and interest in
and to the copyright in Developed Material, whether or not the Developed
Material constitutes a ‘work made for hire’ under applicable copyright Laws.
Health Net and its assigns will have the right to register and hold in their own
name the copyright in and to such Developed Material.

 

  (c) Health Net’s rights to Use Software Work Product that is not deemed to be
Developed Materials are provided in Section 12.4, Section 12.7, and
Section 16.6]. With respect to all other non-Software Work Product that is not
deemed to be Developed Material (i.e., all other non-Software Work Product),
Supplier hereby grants to Health Net and its Affiliates a perpetual, worldwide,
fully paid up, non-exclusive license to Use such Work Product in their
businesses and to authorize others to do the same on their behalf, for no
additional charge.

 

  15.4 Intellectual Property Rights Agreements with Supplier Personnel

Supplier is responsible for having in place with all Supplier Personnel (either
directly or indirectly through their respective employers) such agreements
respecting Intellectual Property Rights as are necessary for Supplier to fulfill
its obligations under this Section 15 (Intellectual Property Rights).

 

  15.5 Other Obligations and Rights Regarding Work Product

 

  (a) Following the creation of any Work Product with respect to which any
Intellectual Property Rights will be owned by Health Net, Supplier will promptly
disclose the Work Product and relevant details in writing to Health Net. In
addition, Supplier will follow its standard processes and procedures to assess
whether any patentable inventions or processes have been created in the course
of performing the Services and provide to Health Net any invention disclosure
prepared by Supplier in accordance with its standard processes and procedures.

 

  (b) All licenses and rights of Use granted under or pursuant to this Agreement
shall be deemed to be, for the purposes of Section 365(n) of the United States
Bankruptcy Code (the “Bankruptcy Code”), licenses to rights in “intellectual
property” as defined under the Bankruptcy Code. Accordingly, the licensee of
such rights shall retain and may fully exercise all of its rights and elections
under the Bankruptcy Code. Upon the commencement of bankruptcy proceedings by or
against either Party under the Bankruptcy Code, the other Party shall be
entitled to retain all of its license rights and Use rights granted under this
Agreement.

 

  15.6 Mental Impressions

 

  (a)

“Mental Impressions” means ideas, concepts, know-how and techniques relating to
data processing and computer programming that are learned and retained in the
unaided memory of a Party’s and or any of its Affiliates’ personnel involved in

 

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performance of this Agreement who have had access to Confidential Information or
materials of the other Party and its Affiliates without deliberately memorizing
them for purposes of reuse.

 

  (b) Each Party and its Affiliates may use the Mental Impressions of their
personnel in their business activities.

 

16. TERMINATION

 

  16.1 Termination By Health Net

 

  (a) Termination for Cause. If Supplier commits (i) a material breach of this
Agreement and fails to cure such breach within thirty (30) days after receiving
notice of the breach from Health Net; or (ii) multiple breaches of this
Agreement, whether material or non-material, that collectively constitute a
material breach of this Agreement, then Health Net may, by giving notice to
Supplier, terminate the Agreement, in whole or by Service Tower, without charge,
as of a date specified in the notice of termination. Any termination by Health
Net shall not constitute an election of remedies and shall be without prejudice
as to Health Net’s other rights and remedies.

 

 

(b)

Termination for Convenience. Anytime after the first (1st ) anniversary of the
Effective Date, Health Net may terminate this Agreement, in whole or by Service
Tower, at any time for convenience (i.e., for any reason or no reason) by giving
Supplier at least three (3) months prior written notice specifying the
terminated Services and designating the termination date and paying to Supplier
on the effective date of termination any applicable termination charges set
forth in Exhibit C-8 (Termination Charges). If a purported termination for cause
by Health Net under Section 16.1(a) is found by a competent authority not to be
a proper termination for cause, then such termination will be deemed to be a
termination for convenience by Health Net under this paragraph. Health Net may
elect to discontinue the performance of the Services, in whole or in part, at a
particular Health Net Facility and such discontinuation will not constitute a
termination for convenience, provided that Health Net continues to receive the
Services at other Health Net Facilities, unless such discontinuation has the
effect of discontinuing the Supplier’s performance of the Services as a whole or
of a Service Tower, subject to Sections 4.2 and 4.5 of Schedule C.

 

  (c) Termination for Certain Service Level Failures. If Supplier fails to meet
the *** Critical Service Level *** Health Net may, by giving notice to Supplier,
terminate the Agreement, in whole or in part, without charge, as of a date
specified in the notice of termination. The Parties agree that the failures
referred to in the preceding sentence must occur while such Service Level is
designated as a Critical Service Level (i.e. , has a Weighting Factor assigned
to it). The foregoing right to terminate shall not be construed as precluding
Health Net from claiming that some other combination of failures to meet Service
Levels or Critical Service Levels is a material breach of this Agreement and to
exercise any available remedies in connection with such material breach. “Top
*** Critical Service Levels” shall mean the *** Critical Service Levels to which
Health Net allocates the highest number of percentage points of the Pool
Percentage Available for Allocation. ***.

 

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  (d) Termination Following a Change of Control of Health Net. “Change of
Control of Health Net” means an announcement by Health Net (i) that any other
entity, person or “group” (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, as amended) will acquire (and eventually does
acquire) Control, or all or substantially all of the assets, of Health Net (or
any parent company of Health Net), whether directly or indirectly, in a single
transaction or series of related transactions, or (ii) that Health Net (or any
parent company of Health Net) will give up Control (and eventually does give up
Control) of Health Net through an act to consolidate with, or be merged with or
into, another entity, or will sell, assign, convey, transfer, lease or otherwise
dispose of all or substantially all of its assets to another person(s) or
entity(ies). In the event of a change of Control event described in (i) or
(ii) above, Health Net shall have the right to terminate this Agreement, in
whole or by Service Tower, by giving Supplier prior written notice specifying
the terminated Services and designating the termination date, provided that such
notice shall be given not more than one hundred eighty (180) days after the
change of Control event described in (i) or (ii) above, and the applicable
termination date shall not be less than ninety (90) days after the date of the
notice. Such termination shall be without charge, except that Health Net shall
pay (A) any outstanding charges for Services actually completed in accordance
with the terms of this Agreement prior to the effective date of termination;
(B) any charges payable under this Agreement for Disengagement Assistance
requested by Health Net; and (C) any applicable termination charges set forth in
Exhibit C-8 (Termination Charges).

 

  (e) Termination Following a Change of Control of Supplier. “Change of Control
of Supplier” means an announcement by Supplier (i) that any other entity, person
or “group” (as such term is used in Section 13(d) of the Securities Exchange Act
of 1934, as amended) will acquire (and eventually does acquire) Control, of all
or substantially all of the assets, of Supplier (or any parent company of
Supplier), whether directly or indirectly, in a single transaction or series of
related transactions, or (ii) that Supplier (or any parent company of Supplier)
will give up Control (and eventually does give up Control) of Supplier through
an act to consolidate with, or be merged with or into, another entity, or will
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its assets to another person(s) or entity(ies). In the
event of a change of Control event described in (i) or (ii) above, Health Net
shall have the right to terminate this Agreement in whole by giving Supplier
prior written notice specifying the terminated Services and designating the
termination date, provided that such notice shall be given not more than one
hundred eighty (180) days after the change of Control event described in (i) or
(ii) above, and the applicable termination date shall not be less than ninety
(90) days after the date of the notice. Such termination shall be without
charge, except that Health Net shall pay (A) any outstanding charges for
Services actually completed in accordance with the terms of this Agreement prior
to the effective date of termination; (B) any charges payable under this
Agreement for Disengagement Assistance requested by Health Net; and (C) any
applicable termination charges set forth in Exhibit C-8 (Termination Charges).

 

  (f) Termination in the Event of a Force Majeure. Health Net’s termination
rights for a Force Majeure Event are provided in Section 24.3 (Force Majeure).

 

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  (g) Termination Due to Regulatory Change. Health Net may terminate this
Agreement, in whole or in part, by giving Supplier at least ninety (90) days
prior written notice specifying the terminated Services and designating the
termination date if a Law enacted after the Effective Date (i) precludes or
substantially restricts Health Net from using or receiving Services or
(ii) substantially increases Health Net’s cost of using or receiving Services
which costs would have been avoided if not for this Agreement. Such termination
shall be without charge, except that Health Net shall pay: (A) any outstanding
charges for Services actually completed in accordance with the terms of this
Agreement prior to the effective date of termination; (B) any charges payable
under this Agreement for Disengagement Assistance requested by Health Net; and
(C) any applicable termination charges set forth in Exhibit C-8 (Termination
Charges).

 

  (h) Termination Due to Increase in Taxes. Health Net may terminate this
Agreement, in whole or by Service Tower, by giving Supplier at least ninety
(90) days prior written notice designating the termination date if (i) the taxes
for which Health Net is responsible pursuant to Section 9.3(c) of this Agreement
as of the Effective Date for all of the Services increase by more than *** of
the Annual Service Charge during the Term (in order to terminate the entire
Agreement) or (ii) such taxes relating to any Service Tower increase by more
than *** of the Annual Service Charge for such Service Tower (in order to
terminate such Service Tower). Such termination shall be without charge, except
that Health Net shall pay: (A) any outstanding charges for Services actually
completed in accordance with the terms of this Agreement prior to the effective
date of termination; (B) any charges payable under this Agreement for
Disengagement Assistance requested by Health Net; and (C) any applicable
termination charges set forth in Exhibit C-8 (Termination Charges).

 

  16.2 Termination Due To Adverse Changes in Supplier’s Financial Circumstances

If Supplier (a) files a petition in bankruptcy; (b) has an involuntary petition
in bankruptcy filed against it which is not challenged within twenty (20) days
and dismissed within sixty (60) days; (c) becomes insolvent, (d) makes a general
assignment for the benefit of creditors; (e) admits in writing its inability to
pay its debts as they mature; or (f) has a receiver appointed for its assets
then Health Net may by giving written notice to Supplier, terminate this
Agreement without charge as of the date specified in such notice of termination.
Supplier shall notify Health Net as soon as possible if one of the circumstances
in Section 16.1(a) above occurs or is likely to occur.

 

  16.3 Termination By Supplier

If, but only if, Health Net unintentionally fails to pay Supplier when due
(a) undisputed charges totaling at least $100,000 under this Agreement or
(b) any disputed charges in excess of the Disputed Charges Cap, and fails to
make such payment within thirty (30)days after the date Health Net receives
notice of non-payment from Supplier as set forth in (ii) below, Supplier may
terminate this Agreement as of a date specified in the written notice of
termination; provided IBM provides Health Net with: (i) written notice of such
unpaid amounts at least fifteen (15) days prior to issuing such notice of
termination; and (ii) a second written notice of such unpaid amounts at least
fifteen (15) days prior to issuing such notice of termination, in each case to
the Health Net Program Manager, Chief Information Officer, General Counsel,
Chief Procurement Officer, and VP of Information Technology. Such second notice
must indicate that Supplier may

 

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exercise its right to terminate this Agreement if such unpaid amounts are not
paid within the time period required above.

 

  16.4 Extension of Termination/Expiration Date

Health Net may extend the effective date of termination/expiration one or more
times as it elects in its discretion. However, the total of all such extensions
may not exceed one hundred eighty (180) days following the effective date of
termination/expiration in place immediately prior to the initial extension under
this Section 16.4. If any extension notice provided to Supplier within
sixty (60) days of the then-scheduled date of termination/expiration would or
would likely to cause Supplier to incur significant Out-of-Pocket Expenses,
Supplier may so notify Health Net. In that case, the extension of this
Agreement’s Term pursuant to the notice will be subject to Health Net agreeing
to reimburse Supplier for its additional significant Out-of-Pocket Expenses
incurred as a result of the extension notice being provided within sixty (60)
days of the then-scheduled date of termination/expiration.

 

  16.5 Partial Termination

If this Agreement is terminated in part pursuant to this Agreement, the portions
of this Agreement not terminated will continue in force according to the terms
of this Agreement. If this Agreement does not otherwise specify the basis for
determining Supplier’s charges for the continuing Services that are not
terminated, the charges payable under this Agreement will be equitably adjusted
to reflect the Services that have been terminated.

 

  16.6 Disengagement Assistance

 

  (a) Commencing twelve (12) months prior to expiration of this Agreement or on
such earlier date as Health Net may request, or commencing upon a notice of
termination (including notice based upon default by Health Net) or of
non-renewal of this Agreement, and continuing (as requested by Health Net) for
up to twelve (12) months following the effective date of expiration or, if
applicable, of termination of this Agreement (as such effective date may be
extended pursuant to Section 16.4), or a portion thereof, Supplier shall provide
Disengagement Assistance to Health Net, or at Health Net’s request to Health
Net’s designee. Health Net’s request may be in the context of its reduction or
removal of a portion of the Services in accordance this Agreement, although this
Agreement is not itself being terminated. Supplier shall also provide
Disengagement Assistance in the event of any partial termination of this
Agreement, such assistance to commence upon notice of termination. Disengagement
Assistance shall include the assistance described in Schedule L and the
following:

 

  (i)

Health Net or Health Net’s designee shall be permitted to undertake, without
interference from Supplier, to hire any Supplier Personnel primarily performing
the Services as of the date of notice of termination, or, in the case of
expiration, within the six (6) month period prior to expiration. Supplier shall
waive, and shall cause its Subcontractors to waive, their rights, if any, under
contracts with such personnel restricting the ability of such personnel to be
recruited or hired by Health Net or Health Net’s designee, provided if Health
Net’s designee is a Supplier Competitor then Health Net will enter into an

 

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agreement with such designee with non-disclosure obligations substantially
similar to those in this Agreement prior to authorizing such recruitment
activities. Health Net or its designee shall have reasonable access to such
personnel for interviews and recruitment. If Health Net or a Health Net designee
makes an offer to hire Supplier Personnel that are required to perform Services
during the Term and Supplier believes the loss of such Supplier Personnel will
materially impact its ability to meet Service Levels during the Term, then
Supplier shall so notify Health Net. If Health Net or Health Net’s designee
elects to hire such Supplier Personnel after receiving such notice, then
Supplier shall be relieved from paying Service Level Credits for failure to meet
the Service Levels referenced in its notice to Health Net to the extent such
failure results from loss of such Supplier Personnel.

 

  (ii) If Health Net is entitled pursuant to this Agreement to a sublicense or
other right to any Software owned or licensed by Supplier which has not already
been granted pursuant to the terms of this Agreement, Supplier shall provide
such sublicense or other right.

 

  (iii) Supplier shall (A) with respect to End Of Term Stranded HSC Costs
Equipment, sell such Equipment pursuant to Section 10 of Schedule C,
(B) (i) obtain any Required Consents from third parties and thereafter assign to
Health Net or its designee leases for some or all of the Equipment (as
designated by Health Net) that was used as of the date of termination or
expiration of this Agreement or portion thereof primarily for providing the
Services, and Health Net shall assume the obligations under such leases that
relate to periods after such date, and (ii) if Health Net elects, Supplier shall
exercise the buy-out clause in the applicable lease for some or all of such
leased Equipment (as designated by Health Net) and then sell such Equipment to
Health Net or its designee, at such buy-out price; and (C) sell to Health Net or
its designee, at Supplier’s then current book value, some or all of the
Equipment (as designated by Health Net) owned by Supplier that was used as of
the date of termination or expiration of this Agreement or portion thereof
primarily for providing the Services. Supplier shall also provide all user and
other documentation relevant to such Equipment which is in Supplier’s
possession. Health Net will assume responsibility under any maintenance
agreements for such Equipment to the extent such responsibilities relate to
periods after the date of termination or expiration of this Agreement and any
Disengagement Assistance Period or portion thereof, provided that if Supplier
has permitted maintenance and support on such Equipment to lapse, Supplier shall
be financially responsible for any charges under such agreements to bring
maintenance and support current, provided further that the foregoing proviso
shall be inapplicable with respect to Equipment that was purchased by Supplier
from Health Net pursuant to Section 11.3(b) of this Agreement and at the time of
purchase was not current on maintenance and support.

 

  (iv)

Supplier shall use Commercially Reasonable Efforts to obtain any necessary
Required Consents and thereafter make available to Health Net or its designee,
pursuant to reasonable terms and conditions, any

 

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dedicated third party services then being utilized by Supplier in the
performance of the Services. Supplier will be entitled to retain the right to
utilize any such third party services in connection with the performance of
services for any other Supplier customer. For clarification, nothing set forth
in this Section shall relieve Supplier of its obligation to procure maintenance
contracts for Software and Equipment as set forth in Section 12.7 and
Section 16.6(a)(iii).

 

  (b) Disengagement Assistance shall include (as requested by Health Net) any or
all of the Services provided by Supplier prior to the effective date of
termination/expiration. Actions by Supplier under this Section 16.6(b) shall be
subject to the other provisions of this Agreement.

 

  (c) Charges for Disengagement Assistance shall be as follows:

 

  (i) For Disengagement Assistance for which there is a predetermined charge in
Schedule C (e.g., for continuation of the business processing Services after the
expiration or termination of this Agreement), such pre-determined charge in
Schedule C shall apply. Supplier shall use Commercially Reasonable Efforts to
provide Disengagement Assistance utilizing Supplier Personnel then being
regularly utilized in performing the Services.

 

  (ii) For Disengagement Assistance for which there is no predetermined charges
in Schedule C (i.e., for assistance that is not part of the routine Services),
such assistance will be chargeable at the time and material rates set forth in
Exhibit C-5 to Schedule C to the extent performed by Supplier Personnel not
otherwise performing Services for Health Net prior to the effective date of
termination or expiration of this Agreement.

 

  16.7 Survival

Any provision of this Agreement that contemplates or governs performance or
observance subsequent to termination or expiration of this Agreement and the
Disengagement Assistance Period will survive the expiration or termination of
this Agreement for any reason, including the following Sections:

 

  (a) Section 2.1 (Definitions);

 

  (b) Section 12.7 (Health Net Rights to Certain Software Upon Termination/
Expiration);

 

  (c) Section 15 (Intellectual Property Rights);

 

  (d) Section 19.5 (Deliverables);

 

  (e) Section 19.8 (Non-Infringement);

 

  (f) Section 19.10 (Disabling Code);

 

  (g) Section 21 (Confidentiality);

 

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  (h) Section 23 (Indemnification);

 

  (i) Section 24 (Liability); and

 

  (j) Section 25 (Rules of Construction).

 

  16.8 Bid Assistance

 

  (a) In the process of deciding whether to undertake or allow any cessation of
Services, or any termination, expiration or renewal of this Agreement, in whole
or in part, Health Net may consider or seek offers for performance of services
similar to the Services. As and when reasonably requested by Health Net for use
in any such process, Supplier will provide to Health Net such information and
other cooperation regarding performance of the Services as would be reasonably
necessary to enable Health Net to prepare a request for proposal relating to
some or all of such services, and for a third party to conduct due diligence and
prepare an informed, non-qualified offer for such services.

 

  (b) Without limiting the generality of Section 16.8(a), the types of
information and level of cooperation to be provided by Supplier pursuant to this
Section 16.8 will be no less than those initially provided by Health Net to
Supplier prior to the Effective Date, and shall include the following
information which Health Net may distribute to third-party bidders in a request
for proposal(s), request for information, specification, or any other
solicitation relating to the Services and as necessary to support any related
due diligence activities:

 

  (i) The number of *** by Service Tower;

 

  (ii) First-order descriptions of Health Net’s IT environment, including a
listing of major infrastructure components and locations;

 

  (iii) Up-to-date Service Level performance histories, asset inventories
(including Equipment and Software), estimated amounts payable by Health Net to
exercise or fulfill asset buy-out or lease assumption rights or obligations,
third-party contract lists, then-current work volumes and information relating
to projects underway; and

 

  (iv) Detailed network topographies.

 

  16.9 Termination of the Cross Tower Services or the Network Services Towers

 

  (a) Health Net shall not have the right to terminate the entire Cross Tower
Services Tower without terminating the entire Agreement. This Section 16.9 is
not intended, however, to limit any other rights Health Net has under this
Agreement to withdraw or terminate portions of the Cross Tower Services Tower
(e.g., DR, security, asset management). If Health Net withdraws a portion of the
Cross Tower Services Tower, or terminates a different Service Tower in
accordance with the terms of this Agreement which has the effect of reducing the
Services necessary to be provided under the Cross Tower Services Tower, then the
Annual Services Charge for the Cross Tower Service Tower shall be subject to
Section 3.6(a).

 

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  (b) Health Net shall not have the right to terminate one of the Network Towers
(i.e., the Voice Network Services Service Tower or Data Network Services Service
Tower) individually under Section 16.1(b), 16.1(d),16.1(g), 16.1(h), or 24.3(c)
without terminating the other Network Services Tower.

 

17. GOVERNANCE AND MANAGEMENT

 

  17.1 Governance Structure and Processes

Supplier acknowledges that it is a key business requirement of Health Net that
Supplier provide the Services in a consistent, integrated manner. To meet that
requirement, Supplier has organized its Health Net relationship and service
delivery team as described below and in Schedule G (Governance).

 

  (a) The Supplier organization responsible for Supplier’s relationship with
Health Net and delivery of the Services will be led by a project executive (the
“Supplier PE”), whose counterpart will be Health Net’s Program Manager. The
Supplier PE will serve as the single point of accountability for Supplier for
the Services and have day-to-day authority for undertaking to ensure Health Net
satisfaction. The Supplier PE will be located during the Term at Health Net’s
Woodland Hills, California headquarters or such other locations as Health Net
may designate.

 

  (b) Health Net will provide annual performance appraisals for the Supplier PE.
Health Net’s appraisals will be used by Supplier as a significant component of
the overall performance appraisals for such individual and as a factor in
determining their compensation.

 

  (c) For each major project undertaken under this Agreement, Supplier will also
designate a project manager who will be assigned full-time or part-time and who
will have responsibility, working under the direction of the Supplier PE, for
the successful completion and delivery of the project.

 

  (d) Schedule G (Governance) also contains a description of the committees and
governance processes the Parties have formed and will use to govern their
relationship and activities under this Agreement.

 

  17.2 Meetings

Within sixty (60) days after the Effective Date, the Parties will determine an
appropriate set of meetings to be held between their representatives, which will
include at least a quarterly meeting of the Supplier PE with Health Net’s
Program Manager. Supplier will prepare and circulate an agenda sufficiently in
advance of each meeting to give the participants an opportunity to prepare for
the meeting. Supplier will make such changes to the agenda as Health Net may
request. Health Net will chair all such meetings. At Health Net’s request,
Supplier will prepare and circulate minutes promptly after each meeting. Minutes
of the meetings will not be binding on either Party if they are in any way
inconsistent with this Agreement. At any time during the Term, Health Net may
reasonably request that the type, frequency, purpose or attendance at such
designated meetings to be modified, and if it does, Supplier shall reasonably
consent to such modifications.

 

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  17.3 Reports

 

  (a) Within sixty (60) days after the Effective Date, the Parties will
determine an appropriate set of periodic reports to be issued by Supplier to
Health Net. Such reports will be no less comprehensive than the internal
reporting of Health Net prior to the Effective Date and be issued at the
frequency reasonably requested by Health Net. Initially, Supplier will continue
to provide to Health Net the same reports as were generated by the resources
that have been transferred or made available to Supplier, or displaced as a
result of this Agreement. Such reports are described in Exhibit W (Reports).

 

  (b) As one such report, Supplier will provide a monthly performance report
describing Supplier’s performance of the Services in the preceding month and
containing the information described in Schedule B (Service Levels) (the
“Monthly Performance Report”). The Monthly Performance Report will be delivered
to Health Net not later than the fifteenth (15th) day of each month. Each
Monthly Performance Report will (i) separately address Supplier’s performance
under each Service Level; (ii) assess the degree to which Supplier has attained
or failed to attain the pertinent objectives for that month, including
measurements with respect to the Service Levels and other metrics specified by
Health Net; (iii) describe the status of each project, each ongoing problem
resolution effort and any other initiative; (iv) explain deviations from the
Service Levels and include for each deviation a plan for corrective action;
(v) set forth a record of the Equipment, Services, Software, personnel changes
and any other changes made during the reporting period that affect, or could
affect, the Services and describe the planned changes during the upcoming month
that may affect the Services; (vi) describe any changes in the status of, or
changes made to, the Health Net Facilities or the Health Net Resources;
(vii) set forth utilization of each Supplier resource (e.g., hour, FTE, etc.)
for which a charge is made under this Agreement; and (viii) include
documentation and information that Health Net reasonably requests to verify
compliance with this Agreement.

 

  17.4 Procedures Manual

 

  (a) The “Procedures Manual” is a document (or set of documents) to be prepared
by Supplier describing how Supplier will perform and deliver the Services under
this Agreement, the Equipment and Software used, and the documentation (e.g.,
operations manuals, user guides, specifications) that provide further details of
the activities. The Procedures Manual will describe the activities Supplier
shall undertake in order to provide the Services, including those direction,
supervision, monitoring, staffing, reporting, planning and oversight activities
normally undertaken to provide services of the type Supplier is to provide under
this Agreement. The Procedures Manual also will include descriptions of the
acceptance testing procedures approved by Health Net, Supplier’s problem
management and escalation procedures, and the other standards and procedures of
Supplier pertinent to Health Net’s interactions with Supplier in obtaining the
Services. The Procedures Manual must be suitable for use by Health Net to
understand the Services.

 

  (b)

Attached as Schedule Q (Draft Procedures Manual Table of Contents) is a draft
table of contents for the Procedures Manual. Working in consultation with Health
Net, Supplier will deliver to Health Net for review and comment, a draft

 

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Procedures Manual describing the Services transitioned from Health Net to
Supplier during each transition wave within ninety (90) days after the
occurrence of each transition wave. The draft Procedures Manual will be
organized generally in accordance with Schedule Q (Draft Procedures Manual Table
of Contents), but may include additional sections or provisions as appropriate.
Supplier will incorporate or address reasonable comments or suggestions of
Health Net and will finalize the Procedures Manual with respect to each wave,
within one hundred fifty (150) days after the occurrence of such wave. The final
Procedures Manual will be subject to the approval of Health Net.

 

  (c) The Procedures Manual will be considered an operational document, which
Supplier may revise with the written approval of Health Net’s Program Manager
without the need to amend this Agreement. Supplier will periodically update the
Procedures Manual to reflect changes in the operations or procedures described
in it. Updates of the Procedures Manual will be provided to Health Net for
review, comment and approval.

 

  (d) Supplier will perform the Services in accordance with the most recent
Health Net-approved version of the Procedures Manual. In the event of a conflict
between the provisions of this Agreement and the Procedures Manual, the
provisions of this Agreement will control.

 

  (e) Notwithstanding anything to the contrary in Section 15 (Intellectual
Property Rights), Health Net and its Affiliates may retain and Use the
Procedures Manual in their businesses and for their benefit both during the Term
and following the expiration or termination of this Agreement solely in
connection with their provision of services for Health Net and its Service
Recipients. Health Net and its Affiliates may permit any of their other service
providers to use the Procedures Manual during and after the Term, but solely in
connection with their provision of services for Health Net and its Service
Recipients, provided Health Net enters into a non-disclosure agreement with such
other service providers with confidentiality terms substantially similar to
those in this Agreement.

 

  17.5 Change Control

 

  (a) “Change” means any material addition to, modification or removal of any
material aspect of the Services (including changes to the manner in which the
Services are performed). “Change Control Process” means the written procedure
set forth in Exhibit A-7 for considering, analyzing, approving and carrying out
Changes designed to ensure that only desirable Changes are made and that Changes
made by or on behalf of Supplier are carried out in a controlled manner with
minimal disruption to the Services and Service Recipients’ business operations.

 

  (b) Any changes to the Change Control Process set forth in Exhibit A-7 which
are agreed to by the Parties should be documented in the Procedures Manual.

 

  (c)

Except as otherwise expressly provided in this Agreement, Health Net has
retained responsibility for establishing its IT architecture, standards
(including security standards) and strategic direction of Health Net (and its
Affiliates). Supplier will support such architecture, standards, and strategic
direction in rendering the Services. Any Equipment and Software provided by or
on behalf

 

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of Supplier that connects to Health Net’s IT Infrastructure will comply with
such architecture, standards, and strategic direction and will only be
introduced into the IT Infrastructure in accordance with the Change Control
Process.

 

  (d) Supplier will not make any Changes, except in accordance with the Change
Control Process and with Health Net’s approval, that may reasonably be expected
to do or result in any of the following: (i) adversely affect the
specifications, functionality, performance or resource efficiency of any
Services or Deliverables; (ii) increase Health Net’s internal costs, Supplier’s
charges to Health Net under this Agreement or charges by other Health Net
suppliers to Health Net; (iii) disrupt or adversely affect any of Health Net’s
or its Affiliates’ business operations; or (iv) deployment of technology that is
not consistent with Health Net’s IT architecture, standards and strategic
direction, as communicated to Supplier.

 

  (e) Health Net will not be obliged to approve any Change proposed by Supplier
if implementation of the change would increase Health Net’s internal costs or
Supplier’s charges to Health Net under this Agreement or charges by other Health
Net suppliers to Health Net, or if it would otherwise adversely affect Health
Net’s or its Affiliates’ business or operations. Supplier shall not implement
any proposed Change that Health Net disapproves.

 

  (f) If an approved Change would result in New Services or a change in these
Terms and Conditions, the Change must be authorized via a contract amendment or
modification made pursuant to Section 25.3 (Contract Amendments and
Modifications).

 

  17.6 Annual Technology Plan

Consistent with Supplier’s responsibilities set forth in Schedule A (Services),
Supplier will prepare an annual technology plan in accordance with the
provisions of this Section 17.6 (Annual Technology Plan) (the “Technology
Plan”). Each Technology Plan after the first one will include a review and
assessment of the immediately preceding Technology Plan. The Technology Plan
will consist of a three-year plan and an annual implementation plan as described
below.

 

  (a) The Technology Plan will include a comprehensive assessment and strategic
analysis of Health Net’s then-current IT Environment for the next three
(3) years, including an assessment of the appropriate direction for the systems
and services used in or comprising the IT Environment in light of Health Net’s
business priorities and strategies and competitive market forces (to the extent
such business information is available or provided to Supplier). The Technology
Plan will include a specific identification of proposed Software and Equipment
strategies and direction, a cost projection, a costs-vs.-benefits analysis of
any proposed Changes, a description of the types of personnel skills and
abilities needed to respond to any recommended Changes or upgrades in
technology, a general plan and a projected time schedule for developing and
achieving the recommendations made, and references to appropriate operating
platforms that support Service Level requirements, exploit industry trends in
production capabilities and provide potential price-performance improvement
opportunities.

 

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  (b) As necessary to support the overall objectives and directions of the three
(3)-year plan, the annual implementation plan will provide specific guidance as
to the information services requirements, projects and plans for the upcoming
year, including details on operations, maintenance backlog and development
activities. The annual implementation plan will include a summary review of
Supplier’s performance of the Services in the year then concluding, and will
provide updates and revisions of the long-term plan as appropriate. Supplier
will prepare an annual implementation plan for each year of the Term. As part of
the process of preparing the annual implementation plan, the Parties will review
the overall operation of this Agreement to ensure that the Services continue to
be aligned with Health Net’s strategic business and IT requirements.

 

  (c) Supplier will submit for Health Net’s review and approval a draft
Technology Plan developed with input from key business users of Health Net.
Supplier will submit the final Technology Plan to Health Net within fifteen
(15) days after receiving Health Net’s comments on the draft. Supplier will
submit the draft of the Technology Plan within nine (9) months after the
Effective Date.

 

  (d) The schedule for developing and delivering each Technology Plan will be
coordinated to support Health Net’s annual business planning cycle. Supplier
will update the Technology Plan during the year as necessary to reflect changes
to Health Net’s and its Affiliates’ businesses that materially affect the
validity of the then-current Technology Plan. Supplier will recommend
modifications to the Technology Plan as it deems appropriate, and will revise
the Technology Plan as requested or approved by Health Net.

 

18. AUDITS AND RECORDS

 

  18.1 Audit Rights

 

  (a) Health Net and its agents, auditors (internal and external), regulators
and other representatives as Health Net may designate (collectively, “Auditors”)
will have the right to inspect, examine and audit the systems, records,
facilities, data, practices and procedures of Supplier and its Subcontractors
that are used in rendering the Services or pertain to the Services
(collectively, “Audits”) for any of the following purposes:

 

  (i) to verify the accuracy of Supplier’s invoices;

 

  (ii) to verify the integrity of those elements of Health Net’s corporate
control processes that are performed by Supplier, in order to permit Health
Net’s management and independent auditors to make certifications required by the
securities or other Laws of any country;

 

  (iii) to verify the integrity of Health Net Data and Supplier’s compliance
with the data privacy, data protection, confidentiality and security
requirements of this Agreement;

 

  (iv) to verify Supplier’s compliance with any other provisions of this
Agreement; and

 

  (v) to satisfy the requirements of the Health Net audit committee and
regulatory requirements.

 

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  (b) Audits will be conducted during business hours and upon reasonable advance
notice to Supplier except in the case of Audits by regulators, emergency or
security Audits and Audits investigating claims of illegal behavior. Without
limiting Health Net’s rights under this Section, Health Net shall reasonably
endeavor to avoid unnecessary disruption of Supplier’s operations and customers
and unnecessary interference with Supplier’s ability to perform the Services in
accordance with the Service Levels. Health Net and its Auditors will comply with
Supplier’s reasonable security and confidentiality requirements when accessing
facilities or other resources owned or controlled by Supplier. Supplier will
cooperate fully with Health Net, its regulators and its and their Auditors in
conducting Audits and provide such assistance as they reasonably require to
carry out the Audits, including installing and operating audit software.
Furthermore, Supplier will comply with Health Net’s internal audit methodology,
as it is made know to Supplier by Health Net. Subject to the foregoing, Auditors
will be provided access to shared systems or shared Supplier facilities used in
the performance of the Services, provided that this Section will not be
construed to give any Auditors access to any data of any customer of Supplier
other than Health Net. No Auditor shall be retained on a contingency fee, except
Auditors engaged to perform Audits related to usage or charges for Network
Services.

 

  18.2 Audit Follow-up

 

  (a) Following an audit or examination, Health Net may conduct, or request its
external auditors or examiners to conduct, an exit conference with Supplier to
discuss issues identified in the review. Supplier shall reasonably cooperate
with Health Net and Health Net’s Auditors in order resolve any issues that arise
from Audit.

 

  (b) At Health Net’s request, Supplier will meet with Health Net to review each
audit report promptly after the issuance thereof and to mutually agree upon the
appropriate manner, if any, in which to respond to the changes suggested by the
audit report.

 

  18.3 Confidentiality of Audits

Audit results will be treated as Supplier Confidential Information except to the
extent they contain Health Net Confidential Information.

 

  18.4 Records Retention

 

  (a) In support of Health Net’s Audit rights, Supplier will keep and maintain
(i) financial records relating to this Agreement (excluding records of
Supplier’s cost that are not relevant to calculation of charges), (ii) records
substantiating Supplier’s invoices, (iii) records pertaining to Supplier’s
compliance with the Service Levels, including root cause analyses, and (iv) such
other operational records pertaining to performance of the Services as Supplier
keeps in the ordinary course of its business.

 

  (b)

Supplier will retain such records and provide access to them upon request for
Audits until the last to occur of the following: (i) three (3) years after
expiration or termination of this Agreement; (ii) any longer period of time to
satisfy any legal obligation of Health Net; (iii) all pending matters relating
to this Agreement (including disputes) are closed; and (iv) the information is
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meet Health Net’s records retention policy as disclosed to Supplier, as such
policy may be revised from time to time. Before destroying or otherwise
disposing of such records, Supplier will provide Health Net with sixty (60) days
prior notice and offer Health Net the opportunity to recover the records or to
request Supplier to deliver the records to Health Net, with Health Net paying
Supplier’s Out-of-Pocket Expenses. With respect to records that are retained
pursuant to item (ii) above, Supplier shall have the option of returning such
records to Health Net rather than retaining such documents.

 

  18.5 Supplier Audits

Supplier will conduct its own Audits pertaining to the Services consistent with
the audit practices of well-managed companies that perform services similar to
the Services, including as provided below and in.

 

  (a) Upon the conclusion of (i) the Transformation (including Transition) and
(ii) thereafter Supplier has provided a minimum of six (6) months of Service
delivery under the Parties jointly designed applicable controls, then for each
year of the Term, Supplier will perform at each Supplier shared data center and
Network Services Center, located in the Americas (US, Canada and LA) and India,
that is used to provide Services, a Statement on Auditing Standards No. 70 Type
II audit (“SAS 70 Audit”) (or in the future if SAS 70 Audits are no longer
available in the industry, a comparably detailed audit) on such Supplier shared
delivery centers using a nationally recognized firm qualified to perform such
audit.

 

  (b) The scope of the SAS 70 Audit shall cover general controls of the Supplier
systems used to provide Services, not specific to but including systems used to
perform processing Services and maintain Health Net data and general computer
controls such as change management and logical access controls.

 

  (c) Subject to Section 18.5(a) above, the SAS 70 Audit shall cover the
preceding twelve (12) month period beginning September 1 through August 31 (or
portion thereof) during the Term (including any extension periods as
applicable). Supplier shall provide a SAS 70 Audit report to Health Net within
ten (10) business days of receipt from the external auditor performing the SAS
70 Audit with the exception of Network Services provided by a Supplier Approved
Subcontractor which shall be sixty (60) calendar days of receipt from the
external auditor performing the Network Services SAS 70 Audit, and in no event
any SAS 70 Audit later than November 30 of each calendar year. If any such SAS
70 Audit is qualified by the external auditor, then:

 

  (i) Supplier shall provide Health Net with a letter in mid-January identifying
any material changes made to Supplier infrastructure or controls covered by the
SAS 70 Audit during the period from September 30 to December 31 of the prior
year (or specifying that no such changes have been made) (“Update Letter”).

 

  (ii) Supplier shall be responsible to implement remedial actions as it deems
appropriate to correct any deficiencies identified in one or more SAS 70 Audits
for Facilities where Supplier delivers Health Net Services; and

 

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  (iii) In the event any SAS 70 report that is required under this Agreement
identifies a deficiency or material weakness in controls, IBM agrees to meet
with Health Net to respond to Health Net’s reasonable inquiries relating to such
deficiency or weakness and the status of any remedial actions being taken by
IBM. Also, IBM will respond to such inquiries in writing if requested to do so
by Health Net.

 

  (d) If Health Net requires a more comprehensive audit than the SAS 70 Audit
set out above, or an audit covering infrastructure, application controls or
other controls used specifically for Health Net, then Supplier shall, as
requested by Health Net, (i) use Commercially Reasonable Efforts to add such
additional requirements to the scope of the SAS 70 Audit (provided Health Net
agrees to pay for any reasonable expenses incurred by Supplier in accommodating
such additional requirements); or (ii) permit a third party auditor engaged by
Health Net to perform such additional audit activities, in each case to the
extent permitted by applicable Law.

 

  (e) If Supplier fails to provide a SAS 70 Audit report in accordance with the
requirements above, Supplier shall be responsible for any reasonable additional
costs or fees incurred by Health Net as a result of the failure.

Without limiting the foregoing, if a Supplier Audit indicates an adverse impact
to Health Net Data, or to Health Net or other Service Recipients, or any
violation of this Agreement, Supplier will immediately notify Health Net,
providing pertinent details so that Health Net can take steps to avoid or
minimize the adverse impacts. Supplier will also correct the errors or problems
as soon as reasonably possible.

 

  18.6 Financial Reports

Supplier will provide to Health Net, on a bi-monthly and annual basis, as
applicable, copies of all publicly-available audited and unaudited financial
statements of Supplier and its Controlling Affiliates.

 

  18.7 Overcharges

If as a result of an audit or otherwise it is determined that Supplier has
overcharged Health Net, Supplier shall credit Health Net’s account (or, at
Health Net’s option, pay Health Net directly) an amount equal to the overcharge
plus interest at a rate equal to the lesser of: (i) eighteen percent (18%) per
annum; or (ii) the maximum amount permissible by applicable law, calculated from
the date the overcharge was paid by Health Net. If an audit discloses that
Supplier’s overcharges exceeded *** of the audited charges, Supplier shall also
reimburse Health Net for the reasonable cost of the audit, up to a cap of ***.

 

19. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SUPPLIER

 

  19.1 Work Standards

Supplier represents, warrants and covenants that the Services will be rendered
with promptness and diligence and be executed in a professional and workmanlike
manner in accordance with the practices and standards observed by the leading
companies in Supplier’s industry when performing similar services. Supplier
warrants and covenants that it will use adequate numbers of qualified Supplier
Personnel with suitable training, education, experience and skill to perform the
Services in accordance with timing and

 

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other requirements of this Agreement.

 

  19.2 Maintenance

Supplier represents, warrants and covenants that it will maintain the Equipment
and Software so they operate in accordance with their specifications, including
(i) maintaining Equipment in good operating condition, subject to normal wear
and tear; (ii) undertaking repairs and preventive maintenance on Equipment in
accordance with the applicable Equipment manufacturer’s recommendations; and
(iii) performing Software maintenance in accordance with the applicable Software
vendor’s documentation and recommendations.

 

  19.3 Efficiency and Cost-Effectiveness

Supplier represents, warrants and covenants that it will use Commercially
Reasonable Efforts to use efficiently the resources or services necessary to
provide the Services. Supplier warrants and covenants that it will use
Commercially Reasonable Efforts to perform the Services in the most
cost-effective manner consistent with the required level of quality and
performance.

 

  19.4 Technology

Supplier represents, warrants and covenants that it will provide the Services
using, consistent with the Change Control Process, proven, current technology
that will enable Health Net to take advantage of technological advancements
applicable to its and its Affiliates’ businesses and support Health Net’s
efforts to maintain competitiveness in the markets in which it competes.

 

  19.5 Deliverables

Supplier represents, warrants and covenants that each Deliverable produced by
Supplier under this Agreement will not, from the time of delivery to Health Net
through the period ending one hundred eighty (180) days after Health Net’s final
acceptance of the Deliverable in accordance with Exhibit A-10-1, deviate in any
material respect from the specifications and requirements for such Deliverable
set forth or referred to in this Agreement (including its Schedules and Exhibits
or a statement of work, work order, project plan or similar document developed
pursuant to this Agreement). The Parties may agree to an alternate warranty
period in an individual project plan]; absent such agreement the warranty period
provided in this Section 19.5 shall govern. If Health Net notifies Supplier of a
breach of the foregoing warranty within the period specified above, Supplier
will promptly correct and redeliver the affected Deliverables at no additional
charge to Health Net without delay.

 

  19.6 Documentation

Supplier represents, warrants and covenants that any Software Documentation
developed for Health Net by or on behalf of Supplier will (a) accurately and
with reasonable comprehensiveness describe the operation, functionality and use
of the Software or system, and (b) accurately describe in terms understandable
to a typical End User the functions and features of the Software or system and
the procedures for exercising such functions and features.

 

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  19.7 Compatibility

Supplier represents, warrants and covenants that any Deliverables and other
components of the Services that would reasonably be anticipated given the
purpose of the Deliverable or other component of the Services to interact or
otherwise work together as part of a functioning system will be compatible and
will properly inter-operate and work together as components of an integrated
system.

 

  19.8 Non-Infringement

 

  (a) Subject to Section 19.8(b), Supplier represents, warrants and covenants as
follows:

 

  (i) that Supplier and Supplier Personnel will perform their responsibilities
under this Agreement in a manner that does not infringe or constitute an
infringement or misappropriation of any Intellectual Property Rights of any
third party;

 

  (ii) that Supplier has all rights and licenses necessary to convey to Health
Net (and to its Affiliates, where applicable) the ownership of (or grant the
license rights with respect to, as applicable), all Software, Work Products,
Independent IP, Deliverables and other items provided by or on behalf of
Supplier, as such ownership and license rights are set forth in this Agreement;

 

  (iii) that no Software, Work Product, Independent IP, Deliverable or other
item provided by or on behalf of Supplier, nor their use by Health Net or other
Service Recipients, will infringe or constitute an infringement or
misappropriation of any Intellectual Property Right of any third party; and

 

  (iv) that Supplier shall not incorporate any Open Source Code into any
Deliverable or Work Product unless approved in writing by Health Net in advance.
“Open Source Code” means any Software that requires as a condition of its use,
modification or distribution that it be disclosed or distributed in source code
form or made available at no charge. Open Source Code includes software licensed
under the GNU General Public License (GPL) or the GNU Lesser/Library GPL.

 

  (b) Supplier will not be considered in breach of the representation, warranty
and covenant set forth in Section 19.8(a)to the extent (but only to the extent)
any claimed infringement or misappropriation is attributable to any of the
following:

 

  (i) Health Net’s modification of an item provided by or on behalf of Supplier
unless the modification was authorized, approved or made by Supplier; or

 

  (ii)

Health Net’s combination, operation or use of an item provided by or on behalf
of Supplier with other specific items not furnished by, through or at the
specification of Supplier or its Subcontractors; provided, however, that this
exception will not be deemed to apply to the combination, operation or use of an
item with other commercially available products that could reasonably have been
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used in combination with the item provided by or on behalf of Supplier (e.g.,
the combination, operation or use of Application Software provided by Supplier
with a commercially available computer and System Software not provided by
Supplier).

 

  19.9 Viruses

“Virus” means (i) program code or programming instruction(s) or set(s) of
instructions intentionally designed to disrupt, disable, harm, interfere with or
otherwise adversely affect computer programs, data files or operations; or
(ii) other code typically described as a virus, Trojan horse, worm, back door or
other type of harmful code. Supplier represents, warrants and covenants that
Supplier Personnel will not knowingly introduce a Virus into Health Net’s or any
other Service Recipient’s system or any system used to provide the Services. In
addition, Supplier will use Commercially Reasonable Efforts to prevent Supplier
Personnel from unknowingly introducing a Virus or allowing a Virus to be
introduced into Health Net’s or any other Service Recipient’s system or any
system used to provide the Services. If a Virus is found to have been introduced
into Health Net’s or other Service Recipients’ systems or the systems used to
provide the Services as a result of a breach of the foregoing representation,
warranty and covenant, Supplier will use Commercially Reasonable Efforts at no
additional charge to assist Health Net in eradicating the Virus and reversing
its effects and, if the Virus causes a loss of data or operational efficiency,
to assist Health Net in mitigating and reversing such losses.

 

  19.10  Disabling Code

Supplier represents, warrants and covenants that in the course of providing the
Services it will not insert into Software or any systems used to provide the
Services any code that would have the effect of disabling or otherwise shutting
down all or any portion of the Services. With respect to any disabling code that
was already part of Software or systems used to provide the Services, Supplier
represents, warrants and covenants that it will not invoke such disabling code
or knowingly permit it to be invoked at any time without Health Net’s prior
written consent. For purposes of this warranty and covenant, programming errors
will not be deemed disabling code to the extent Supplier can demonstrate that
such errors were not made with the intention of disabling or otherwise shutting
down all or any portion of Health Net’s or any other Service Recipient’s systems
or any system used to provide the Services.

 

  19.11  Compliance with Health Net Policies and Procedures

Supplier represents, warrants and covenants to Health Net that Supplier will
perform its obligations in accordance with Section 5.4(c).

 

  19.12  Compliance with Laws; Export Control

 

  (a) Supplier represents, warrants and covenants to Health Net that Supplier
will perform its obligations in a manner that complies with Section 27.5,
including Laws of any country or jurisdiction from which Supplier provides the
Services; including identifying and procuring any required permits,
certificates, approvals and inspections.

 

  19.13  Corporate Social Responsibility

Supplier represents, warrants and covenants to Health Net that Supplier and
Supplier

 

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Facilities comply, and during the Term will comply, with the following:

 

  (a) Supplier will not use forced or compulsory labor in any form, including
prison, indentured, political, bonded or otherwise.

 

  (b) Supplier will not follow policies promoting or resulting in unacceptable
worker treatment such as the exploitation of children, physical punishment,
female abuse, involuntary servitude, or other forms of abuse.

 

  (c) Supplier will not discriminate based on race, creed, gender, marital or
maternity status, class or caste status, religious or political beliefs, age or
sexual orientation. Supplier’s decisions related to hiring, salary, benefits,
advancement, termination or retirement will be based solely on lawful practices
and consistent with its then-current human resources practices.

 

  (d) Supplier’s management practices will recognize the dignity of the
individual employee and the right to a work place free of harassment, abuse or
corporal punishment, and will respect Supplier’s employees’ voluntary freedom of
association.

 

  (e) Supplier will comply with all applicable Laws concerning the conditions of
employment of its employees, including those relating to pay, benefits, and
working conditions.

 

  (f) Supplier will maintain on file all documentation needed to demonstrate
compliance with these standards and shall make these documents available for
Health Net and its auditors upon reasonable prior notice to the extent such
records relate to the performance of the Services. Supplier will publicize to
its employees and enforce a non-retaliation policy that permits Supplier’s
employees to speak with Health Net and Health Net’s auditors without fear of
retaliation by Supplier or Supplier’s management. For clarity, nothing in this
Section shall be deemed to waive Supplier’s rights in Confidential Information
of Supplier.

 

  19.14  Subcontractor Confidentiality and Assignment

Supplier represents, warrants and covenants to Health Net that each of
Supplier’s subcontractors performing the Services will, prior to performing any
Services, have executed an agreement satisfying the confidentiality and data
protection obligations provided in this Agreement.

 

  19.15  No Improper Inducements

Supplier represents, warrants and covenants to Health Net that it has not
violated any applicable Laws or any Health Net policies of which Supplier has
been given notice regarding the offering of unlawful or improper inducements in
connection with this Agreement.

 

20. MUTUAL REPRESENTATIONS AND WARRANTIES; DISCLAIMER

 

  20.1 Mutual Representations and Warranties

Each Party represents, warrants and covenants to the other that:

 

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  (a) It has the requisite corporate power and authority to enter into this
Agreement and to carry out the transactions and activities contemplated by this
Agreement;

 

  (b) The execution, delivery and performance of this Agreement and the
con-summation of the transactions contemplated by this Agreement have been duly
authorized by the requisite corporate action on the part of such Party, are a
valid and binding obligation of such Party, and do not constitute a violation of
any existing judgment, order or decree;

 

  (c) The execution, delivery and performance of this Agreement and the
con-summation of the transactions contemplated by this Agreement do not
constitute a material default under any existing material contract by which it
or any of its material assets is bound, or an event that would, with notice or
lapse of time or both, constitute such a default; and

 

  (d) There is no proceeding pending or, to the knowledge of the Party,
threatened that challenges or could reasonably be expected to have a material
adverse affect on this Agreement or the ability of the Party to perform and
fulfill its obligations under this Agreement.

 

  (e) OTHER THAN AS EXPRESSLY PROVIDED IN THE AGREEMENT, THERE ARE NO EXPRESS
WARRANTIES AND THERE ARE NO IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

 

21. CONFIDENTIALITY

 

  21.1 “Confidential Information” Defined

 

  (a) “Confidential Information” of a Party means any non-public, commercially
sensitive information (or materials) belonging to, concerning or in the
possession or control of the Party or any of its Affiliates (the “Furnishing
Party”) that is furnished, disclosed or otherwise made available (directly or
indirectly) to the other Party (the “Receiving Party”) (or entities or persons
acting on the other Party’s behalf) in connection with this Agreement and which
is either marked or identified in writing as confidential, proprietary, secret
or with another designation sufficient to give notice of its sensitive nature,
or is of a type that a reasonable person would recognize it to be confidential.
In the case of Health Net, “Confidential Information” includes any information
to which Supplier has access in Health Net Facilities or Health Net systems
meeting the above standard, all Work Product owned by Health Net under this
Agreement and information pertaining to it, Health Net Data, Health Net
Software, systems access codes and information concerning Health Net’s and/or
its Affiliates’ products, marketing strategies, financial affairs, employees,
customers (including protected health information) or suppliers, regardless of
whether or how it is marked. Any notes, memoranda, compilations, derivative
works, data files or other materials prepared by or on behalf of the Receiving
Party that contain or otherwise reflect or refer to Confidential Information of
the Furnishing Party will continue to be Confidential Information of the
Furnishing Party even though incorporated into a separate document.

 

  (b)

“Confidential Information” does not include any particular information (other
than protected health information) that the Receiving Party can demonstrate:

 

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(i) was rightfully in the possession of, or was rightfully known by, the
Receiving Party without an obligation to maintain its confidentiality prior to
receipt from the Furnishing Party; (ii) was or has become generally known to the
public other than as a result of disclosure by the Receiving Party or any of its
agents; (iii) after disclosure to the Receiving Party, was received from a third
party who, to the Receiving Party’s knowledge, had a lawful right to disclose
such information to the Receiving Party without any obligation to restrict its
further use or disclosure; or (iv) was independently developed by the Receiving
Party without use of or reference to any Confidential Information of the
Furnishing Party.

 

  21.2 Obligations of Confidentiality

 

  (a) Each Party acknowledges that it may be furnished, receive or otherwise
have access to Confidential Information of the other Party in connection with
this Agreement.

 

  (b) The Receiving Party will not reproduce Confidential Information of the
Furnishing Party except as reasonably required to accomplish the purposes and
objectives of this Agreement. The Receiving Party will not disclose the
Confidential Information of the Furnishing Party to any person or appropriate it
for the Receiving Party’s own use, or for any other person’s use or benefit,
except as specifically permitted by this Agreement or approved in writing by the
Furnishing Party.

 

  (c) The Receiving Party will keep the Confidential Information of the
Furnishing Party confidential and secure and will protect it from unauthorized
use or disclosure by using at least the same degree of care as the Receiving
Party employs to avoid unauthorized use or disclosure of its own Confidential
Information, but in no event less than reasonable care.

 

  (d) As necessary to accomplish the purposes of this Agreement, the Receiving
Party may disclose Confidential Information of the Furnishing Party to any
employee, officer, director, contractor, Service Recipient, agent or
representative of the Receiving Party who has a legitimate “need to know” the
information in question and who is bound to the Receiving Party to protect the
confidentiality of the information in a manner substantially equivalent to that
required of the Receiving Party under this Agreement. The Receiving Party may
also disclose Confidential Information of the Furnishing Party to the Receiving
Party’s regulatory agencies and Auditors provided they are made aware of the
Receiving Party’s obligations of confidentiality with respect to the Furnishing
Party’s Confidential Information. Notwithstanding the forgoing, Health Net and
its Affiliates shall be permitted to disclose Supplier Confidential Information,
including this Agreement and the transactions contemplated by this Agreement to
the extent required by law, in any periodic reports filed or required to be
filed with the Securities and Exchange Commission (“SEC”), as well as the New
York Stock Exchange, without making such entities aware of Receiving Party’s
obligations of confidentiality. Health Net agrees that with respect to any
filing of the Agreement required by law, that it will work in good faith with
Supplier in connection with the preparation and filing of a confidentiality
treatment request relating to the Agreement. In the event that a disclosure of
this Agreement is to be made to a regulatory agency that is not required by law,
Receiving Party shall use reasonable efforts to seek appropriate confidentiality
protection of such information from such agencies.

 

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  (e) If any unauthorized disclosure, loss of, or inability to account for any
Confidential Information of the Furnishing Party occurs, the Receiving Party
will promptly so notify the Furnishing Party and will cooperate with the
Furnishing Party and take such actions as may be necessary or reasonably
requested by the Furnishing Party to minimize the violation and any damage
resulting from it.

 

  21.3 No Implied Rights

Each Party’s Confidential Information will remain the property of that Party.
Nothing contained in this Section 21 (Confidentiality) will be construed as
obligating a Party to disclose its Confidential Information to the other Party,
or as granting to or conferring on a Party, expressly or by implication, any
rights or license to the Confidential Information of the other Party. Any such
obligation or grant will only be as provided by other provisions of this
Agreement.

 

  21.4 Compelled Disclosure

If the Receiving Party becomes legally compelled to disclose any Confidential
Information of the Furnishing Party in a manner not otherwise permitted by this
Agreement, the Receiving Party will provide the Furnishing Party with prompt
notice of the request so that the Furnishing Party may seek a protective order
or other appropriate remedy. If a protective order or similar order is not
obtained by the date by which the Receiving Party must comply with the request,
the Receiving Party may furnish that portion of the Confidential Information
that it determines it is legally required to furnish. The Receiving Party will
exercise reasonable efforts to obtain assurances that confidential treatment
will be accorded to the Confidential Information so disclosed.

 

  21.5 Confidential Treatment of this Agreement

Each Party may disclose the existence and general nature of this Agreement as
permitted by Section 27.7 (Public Disclosures), but otherwise the terms and
conditions of this Agreement will be considered the Confidential Information of
each Party; provided however, that the terms and conditions may be disclosed by
either Party in connection with an actual or good-faith proposed merger,
acquisition, or similar transaction, so long as such receiving entity first
agrees in writing to obligations substantially similar to those described in
this Section 21.

 

  21.6 Disclosure of Information Concerning Tax Treatment

Notwithstanding anything to the contrary in this Section 21 (Confidentiality),
each Party (and its Affiliates), and any person acting on their behalf, may
disclose to any person or entity the “tax structure” and “tax treatment” (as
such terms are defined in the U.S. Internal Revenue Code and regulations under
it) of the transactions effected by this Agreement and any materials provided to
that Party (or its Affiliates) describing or relating to such tax structure and
tax treatment; provided, however, that this disclosure authorization will not be
interpreted to permit disclosure of (i) any materials or portions of materials
that are not related to the transaction’s tax structure or tax treatment, or
(ii) any materials or information that the Party (or its Affiliate(s)) must
refrain from disclosing to comply with applicable securities Laws.

 

  21.7 Return or Destruction

As requested by the Furnishing Party during the Term, the Receiving Party will
return or

 

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provide the Furnishing Party a copy of any designated Confidential Information
of the Furnishing Party. When Confidential Information of the Furnishing Party
is no longer required for the Receiving Party’s performance under this
Agreement, or in any event upon expiration or termination of this Agreement, the
Receiving Party will return all materials in any medium that contain, or refer
to, Confidential Information of the Furnishing Party or, at the Furnishing
Party’s election, destroy them. The Receiving Party may, however, keep (a) any
Confidential Information of the Furnishing Party that the Receiving Party has a
license to continue using, (b) in the files of its legal department or outside
counsel, for record purposes only, one copy of any material requested to be
returned or destroyed, and (c) archival copies as may be necessary to comply
with document retention laws and regulations applicable to such Party’s business
operations. Additionally, a Party shall have no obligation to destroy any
Confidential Information that is subject to a claim, dispute, lawsuit, or
subpoena or in any other circumstances in which such Party reasonably believes
that destruction of such Confidential Information would be unethical or
unlawful. At the Furnishing Party’s request, the Receiving Party will certify in
writing that it has returned or destroyed all copies of the Furnishing Party’s
Confidential Information in the possession or control of the Receiving Party’s
or any of its Affiliates or contractors.

 

  21.8 Duration of Confidentiality Obligations

The Receiving Party’s obligations under this Section 21 (Confidentiality) apply
to Confidential Information of the Furnishing Party disclosed to the Receiving
Party before or after the Effective Date and will continue during the Term and
survive the expiration or termination of this Agreement as follows:

 

  (a) The Receiving Party’s obligations under Section 21.7 (Return or
Destruction) will continue in effect until fully performed;

 

  (b) As to any portion of the Furnishing Party’s Confidential Information that
constitutes a trade secret under applicable Law, the obligations will continue
for as long as the information continues to constitute a trade secret;

 

  (c) As to all other Confidential Information of the Furnishing Party, the
obligations will survive for two (2) years after the Receiving Party’s
fulfillment of its obligations under Section 21.7 (Return or Destruction) with
respect to the Confidential Information in question; and

 

  (d) With respect to protected health information, the obligations shall
survive indefinitely.

 

22. INSURANCE

Supplier represents that it has, as of the Effective Date, and agrees to
maintain in force throughout the Term at least the types and amounts of
insurance coverage specified in Schedule H (Supplier Insurance Coverage).

 

23. INDEMNIFICATION

 

  23.1 “Claim” and “Losses” Defined

“Claim” means any demand, or any civil, criminal, administrative, or
investigative claim, action, or proceeding (including arbitration) commenced or
threatened against an entity

 

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or person. “Losses” means all losses, liabilities, damages, liens, and claims,
and all related costs, expenses, and other charges suffered or incurred as a
result of or in connection with a Claim in each case to the extent paid to a
third party in settlement or judgment, including reasonable attorneys’ fees and
disbursements, costs of investigation, litigation, settlement, and judgment, and
any taxes, interest, penalties, and fines with respect to any of the foregoing.

 

  23.2 Indemnification By Supplier

Supplier will at its expense indemnify, defend and hold harmless Health Net and
its Affiliates, and their respective officers, directors, customers, employees,
agents, representatives, successors and assigns (collectively, “Health Net
Indemnitees”) from and against any and all Losses suffered or incurred by any of
them arising from, in connection with, or based on any of the following,
whenever made:

 

  (a) Any Claim by, on behalf of or relating to any of the Affected Employees
relating to Supplier’s employee selection, communications, recruitment, or
hiring process, except to the extent caused by misrepresentations or wrongful
actions by Health Net;

 

  (b) Any Claim relating to Supplier’s alleged failure to observe or perform any
duties or obligations to be observed or performed by Supplier on or after the
Effective Date under any of the Health Net contracts referenced or identified in
Section 11 (Transfer or Use of Resources) that are assigned to Supplier or for
which Supplier has assumed financial, administrative and/or operational
responsibility;

 

  (c) Any Claim by a Subcontractor or by other Supplier Personnel, including
claims by such personnel that Health Net is liable to such personnel for
employee benefits or as the employer or joint employer of such personnel, except
to the extent, if any, that Health Net is required to indemnify Supplier in
respect of the Claim. In the case of a Claim by employees of Supplier,
Supplier’s indemnification of Health Net Indemnitees will be to the same extent
as if the Claim were made by a person who is not an employee of Supplier;

 

  (d) Any Claim relating to an alleged breach of Supplier’s obligations under
Section 21 (Confidentiality);

 

  (e) Any Claim relating to an alleged breach of Section 19.8
(Non-Infringement);

 

  (f) Any Claim relating to an alleged breach of Supplier’s obligations under
Section 27.5 (Legal Compliance);

 

  (g) Any Claim for death or bodily injury, or the damage, loss or destruction
of real or tangible personal property of any third party (including employees of
Health Net or Supplier or their respective subcontractors) brought against a
Health Net Indemnitee alleged to have been caused by the tortious acts or
omissions of Supplier, Supplier Personnel or anyone else for whose acts Supplier
is responsible. However, Supplier will have a right of contribution from Health
Net with respect to the Claim to the extent Health Net’s comparative negligence
is responsible for causing the alleged injury or damage, loss or destruction;

 

  (h)

Any Claim with respect to Supplier’s use of any third party software made
available by Health Net to Supplier or Supplier’s Subcontractors to the extent
the

 

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loss results from a breach by Supplier or Supplier Subcontractors’ of the
applicable third party license agreement to the extent Supplier is made aware of
the requirements.

 

  (i) Any amounts including taxes, interest, and penalties assessed against
Health Net which arise as a result of Supplier’s failure to comply with and
perform its obligations under Section 9.3;

 

  (j) any breach of any of Supplier’s representations or warranties set forth in
Section 19.9 (Viruses)(second sentence only), Section 19.10 (Disabling Code),
and Section 20 (Mutual Representations and Warranties).

 

  (k) any Claim arising out of or related to occurrences Supplier is required to
insure against under this Agreement but only to the extent resulting from a
failure by Supplier to procure the required insurance.

 

  23.3 Infringement Claims

If any item used by Supplier to provide the Services becomes, or in Supplier’s
reasonable opinion is likely to become, the subject of an infringement or
misappropriation Claim, Supplier will, in addition to indemnifying Health Net
Indemnitees as provided in this Section 23 (Indemnification) and to the other
rights Health Net may have under this Agreement, at its expense: (i) promptly at
Supplier’s expense secure the right to continue using the item, or (ii) if this
cannot be accomplished with Commercially Reasonable Efforts, then at Supplier’s
expense, replace or modify the item to make it non-infringing or without
misappropriation, while not degrading performance, functionality, or quality,
increasing Health Net costs, or disrupting Health Net’s business operations, or
(iii) if neither of the foregoing can be accomplished by Supplier with
Commercially Reasonable Efforts, and only in such event, then upon at least one
hundred eighty (180) days’ prior written notice to Health Net, Supplier may
remove the item from the Services, in which case Supplier’s charges will be
equitably adjusted to reflect such removal. If removal of the item from Services
causes the loss or degradation of the Services or any portion of the Services,
and that loss or degradation would otherwise constitute a material breach of
this Agreement, then Health Net may terminate this Agreement without payment of
a fee or other liability by providing written notice to Supplier designating the
effective date of termination.

 

  23.4 Indemnification By Health Net

Health Net will at its expense indemnify, defend and hold harmless Supplier, and
its officers, directors, employees, agents, representatives, successors and
assigns (collectively, “Supplier Indemnitees”) from and against any and all
Losses suffered or incurred by any of them arising from, in connection with or
based on any of the following, whenever made:

 

  (a) Any Claim by, on behalf of or relating to any of the Affected Employees
with respect to matters occurring prior to the Effective Date, excluding Claims
for which Supplier is required to indemnify under Section 23.2(a);

 

  (b)

Any Claim relating to Health Net’s failure to observe or perform any duties or
obligations to be observed or performed prior to the Effective Date by Health
Net under any of the Health Net contracts referenced or identified in Section 11

 

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(Transfer or Use of Resources) that are assigned to Supplier or for which
Supplier has assumed financial, administrative or operational responsibility;

 

  (c) Any Claim relating to an alleged breach of Health Net’s obligations under
Section 21 (Confidentiality) or the Business Associate Agreement;

 

  (d) Any Claim relating to an alleged breach of Health Net’s obligations under
Section 27.5 (Legal Compliance);

 

  (e) Any Claim of infringement or misappropriation of any patent, trade secret,
copyright or other proprietary rights, alleged to have occurred because of
systems or other items provided to Supplier by Health Net;

 

  (f) Any Claim for death or bodily injury, or the damage, loss or destruction
of real or tangible personal property of any third party (including employees of
Health Net or Supplier or their respective subcontractors) brought against a
Supplier Indemnitee alleged to have been caused by the tortious acts or
omissions of Health Net, Health Net personnel or anyone else for whose acts
Health Net is responsible. However, Health Net will have a right of contribution
from Supplier with respect to the Claim to the extent Supplier’s comparative
negligence is responsible for causing the alleged injury or damage, loss or
destruction; and

 

  (g) Any Claim by a Service Recipient asserting rights under this Agreement
against Supplier (other than rights of indemnification under this Section 23).

 

  23.5 Indemnification Procedures

The following procedures will apply to Claims for which a Party seeks to be
indemnified pursuant this Agreement:

 

  (a) Notice. Promptly after an indemnitee receives notice of any Claim for
which it will seek indemnification pursuant to this Agreement, the indemnitee
will promptly notify the indemnitor of the Claim in writing. No failure to so
notify the indemnitor will abrogate or diminish the indemnitor’s obligations
under this Section 23 (Indemnification) if the indemnitor has or receives
knowledge of the Claim by other means or if the failure to notify does not
materially prejudice its ability to defend the Claim. Within fifteen (15) days
after receiving an indemnitee’s notice of a Claim, but no later than ten (10)
days before the date on which any formal response to the Claim is due, the
indemnitor will notify the indemnitee in writing as to whether the indemnitor
acknowledges its indemnification obligation and elects to assume control of the
defense and settlement of the Claim (a “Notice of Election”).

 

  (b)

Procedure Following Notice of Election. If the indemnitor timely delivers a
Notice of Election to the address set forth in Section 27.3 acknowledging its
indemnification obligation and electing to assume control of the defense and
settlement of the Claim, it will be entitled to have sole control over the
defense and settlement of the Claim. After delivering a timely Notice of
Election acknowledging its indemnification obligation and electing to assume
control of the defense and settlement of the Claim, the indemnitor will not be
liable to the indemnitee for any legal expenses subsequently incurred by the
indemnitee in defending or settling the Claim. In addition, the indemnitor will
not be required to reimburse the indemnitee for any amount paid or payable by
the indemnitee in

 

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settlement of the Claim if the settlement was agreed to without the written
consent of the indemnitor.

 

  (c) Procedure Where No Notice of Election Is Delivered. If the indemnitor does
not deliver a timely Notice of Election for a Claim acknowledging its
indemnification obligation and electing to assume control of the defense and
settlement of the Claim, the indemnitee may defend and/or settle the Claim in
such manner as it may deem appropriate, at the cost and expense of the
indemnitor, including payment of any settlement, judgment or award and the costs
of defending or settling the Claim. The indemnitor will promptly reimburse the
indemnitee upon demand for all Losses suffered or incurred by the indemnitee as
a result of or in connection the Claim.

 

  23.6 Subrogation

Upon fulfilling all of its obligations under this Section 23 (Indemnification)
with respect to a Claim, including making payment in full of all amounts due
pursuant to its indemnification obligations, the indemnitor will be subrogated
to the rights of the indemnitee(s) with respect to that Claim.

 

24. LIABILITY

 

  24.1 General Intent

Subject to the specific provisions of this Section 25 (Liability), it is the
intent of the Parties that if a Party fails to perform its obligations in the
manner required by this Agreement, that Party will be liable to the other Party
for any actual damages suffered or incurred by the other Party as a result.

 

  24.2 Limitations of Liability

 

  (a) Except as provided in Section 24.2(c), Section 24.2(e), and
Section 24.2(f), in no event, whether in contract or in tort (including breach
of warranty, negligence and strict liability in tort), will a Party be liable
for indirect or consequential, exemplary, punitive or special damages
(collectively “Consequential Damages”) even if such Party has been advised in
advance of the possibility of such damages.

 

  (b) Except as provided in Section 24.2(c), Section 24.2(e), and
Section 24.2(f), each Party’s total liability to the other, whether in contract
or in tort (including breach of warranty, negligence and strict liability in
tort) will be limited to an amount equal to the total charges paid or payable to
Supplier pursuant to this Agreement for proper performance of the Services for
the twelve (12) months prior to the month in which the most recent event giving
rise to liability occurred. If the most recent event giving rise to liability
occurs during the first twelve (12) months after the Effective Date, liability
will be limited to an amount equal to twelve (12) times the result obtained by
dividing the total charges paid or payable under this Agreement from the
Effective Date through the date on which such event occurred by the number of
months from the Effective Date through such date. An additional *** charges
shall be added to the foregoing*** for either of the following:

 

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  (i) Damages attributable to the tortious willful misconduct of a Party ***, or

 

  (ii) Damages arising out of a failure by Supplier to commence the provision of
Disengagement Assistance (or the cessation of such assistance after
commencement), which:

 

  (A) occurs after Health Net (1) has satisfied all pre-conditions necessary for
Supplier to provide such Disengagement Assistance pursuant to Section 16.6; and
(2) after Health Net has provided not less than two (2) written notices to
Supplier requesting Disengagement Assistance, and (3) after such time that
Health Net has cured any Health Net breach of its payment obligations under
Section 10.2 (subject to Health Net’s right to dispute charges pursuant to
Section 10.7; and

 

  (B) prevents the transition of core elements (i.e., the elements that enable
Health Net to conduct a core business function) of a Service Tower from Supplier
to Health Net or Health Net’s designee;

and *** shall be recoverable in an amount of up to *** months of such *** of
charges.

Service Level Credits do not count against and do not reduce the amounts
available under the foregoing limitations.

 

  (c) The limitations and exclusions of liability set forth in Section 24.2(a)
and Section 24.2(b) (Limitations of Liability) will not apply to any of the
following: ***.

 

  (d) “Service Recipient Damages” shall mean damages suffered by a Service
Recipient, but only to the extent that Health Net would be entitled to recover
such damages under the terms and conditions of this Agreement if Health Net had
incurred such damages instead of such Services Recipients. Notwithstanding any
other provision of this Agreement, IBM and Health Net agree that Health Net
shall be entitled to recover Service Recipient Damages from IBM. For
clarification, Service Recipient Damages shall be aggregated with Health Net’s
damages in determining IBM’s total liability to Health Net for purposes of
Section 24.2(b) above.

 

  (e) Without limiting (i) each Party’s responsibility for direct damages under
the Agreement, and (ii) each Party’s right to claim other direct damages, the
following shall be considered direct damages and shall not be considered
consequential damages to the extent they result form a Party’s failure to
fulfill its obligations in accordance with this Agreement:

 

  (i) ***;

 

  (ii) ***;

 

  (iii) ***;

 

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  (iv) ***; and

 

  (v) ***.

 

  (f) Notwithstanding Section 24.2(a) - Section 24.2(d) above regarding
limitations and exclusions of liability, Supplier shall be liable for, and
Health Net shall have the right to recover from Supplier, the following: ***.
Supplier’s total liability under this Section 24.2(f) shall be limited to
(i) for the period from the Effective Date until the earlier to occur of (A) the
date that is eighteen (18) months after the Effective Date, and (B) the date
that the primary servers supporting the iSeries, zSeries and VMS platforms are
running in production from Supplier’s data center in Boulder, Colorado (such
earlier date being the “Data Center Transformation Date”), an amount equal
to***, and (ii) after the Data Center Transformation Date, an amount equal
to***, unless the fines, penalties, sanctions, prompt pay interest or similar
amount relates to Health Net Data that is encrypted or that Supplier was
obligated to encrypt under this Agreement, in which event the amount shall be
equal to the total charges paid or payable to Supplier pursuant to this
Agreement for proper performance of the Services for the *** prior to the month
in which the most recent event giving rise to liability occurred. Nothing set
forth in this Section 24.2(f) shall be construed to limit Supplier’s obligations
or liability with respect to Supplier’s indemnification obligations set forth in
Section 23.2.

 

  (g) Each Party has a duty to use Commercially Reasonable Efforts to mitigate
the damages suffered by it for which the other Party is or may be liable.

 

  24.3 Force Majeure

 

  (a) No Party will be liable for any default or delay in the performance of its
obligations under this Agreement (i) if and to the extent such default or delay
is caused, directly or indirectly, by fire, flood, pestilence, earthquake,
elements of nature or acts of God, riots, or civil disorders, (ii) provided the
non-performing Party is without fault in causing such default or delay, and such
default or delay could not have been prevented by reasonable precautions and
could not reasonably be circumvented by the non-performing Party through the use
of alternate sources, workaround plans or other means (including with respect to
Supplier by Supplier meeting its obligations for performing disaster recovery
and business continuity services as described in this Agreement) (each such
event a “Force Majeure Event”).

 

  (b)

In such event the non-performing Party will be excused from further performance
or observance of the obligations so affected for as long as such circumstances
prevail and such Party continues to use Commercially Reasonable Efforts to
recommence performance or observance without delay. Any Party so delayed in its
performance will immediately notify the Party to whom performance is due by
telephone (to be confirmed in writing within twenty-four (24) hours of the
inception of such delay) and describe at a reasonable level of detail the
circumstances causing such delay. To the extent the provision of the Services or
any part thereof is prevented or materially affected by a Force Majeure Event,
Health Net’s obligation to pay charges hereunder shall accordingly be reduced by
an equitable amount (which in the case of total suspension of the Services would

 

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be an amount equal to the total charges hereunder for the period of suspension),
subject to any Health Net payment obligations under Section 24.3(c).

 

  (c) If any event under Section 24.3(a) substantially prevents, hinders or
delays performance of the Services, then upon Health Net’s request, Supplier
shall use Commercially Reasonable Efforts to obtain such Services from an
alternate source, the implementation of which shall be subject to Health Net’s
prior approval. If such event substantially prevents, hinders, or delays
performance of Services necessary for the performance of functions reasonably
identified by Health Net as critical for more than *** consecutive days, then at
Health Net’s option: (i) Health Net may procure such Services from an alternate
source, and Supplier will be liable for payment for such Services from the
alternate source for so long as the delay in performance will continue but not
to exceed *** and provided Health Net continues to pay Supplier for the Services
subject to the Force Majeure Event; (ii) Health Net may terminate any portion of
this Agreement so affected by such Force Majeure Event and the charges payable
under this Agreement will be equitably adjusted to reflect those terminated
Services; or (iii) Health Net may terminate this Agreement without liability to
Health Net or Supplier as of a date specified by Health Net in a written notice
of termination to Supplier. Supplier will not have the right to any additional
payments from Health Net for costs or expenses incurred by Supplier as a result
of any Force Majeure Event, except for (i) Wind Down Costs relating to Service
Towers that were unaffected by the Force Majeure Event but nonetheless
terminated by Health Net pursuant to this Section 24.3(c); and (ii) charges
payable under this Agreement for Disengagement Assistance required by Health
Net.

 

  (d) A Force Majeure Event will not relieve Supplier of its obligations to
implement successfully all of the Services relating to disaster recovery
services that are included in this Agreement within the time period described in
this Agreement unless the resources specifically identified in Supplier’s
disaster recovery plan for Health Net have also been rendered unavailable as a
result of a Force Majeure Event to those resources.

 

25. RULES OF CONSTRUCTION

 

  25.1 Entire Agreement

This Agreement – consisting of the signature page, these Terms and Conditions
and the attached Schedules and Exhibits – constitutes the entire agreement
between the Parties with respect to its subject matter and merges, integrates
and supersedes all prior and contemporaneous agreements and under-standings
between the Parties, whether written or oral, concerning its subject matter.

 

  25.2 Contracting Parties; No Third Party Beneficiaries

This Agreement is entered into solely between, and may be enforced only by,
Health Net and Supplier. This Agreement does not create any legally enforceable
rights in third parties, including suppliers, subcontractors and customers of a
Party, except as provided in this paragraph and Section 23 (Indemnification).

 

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  25.3 Contract Amendments and Modifications

Any terms and conditions varying from this Agreement on any order or written
notification from either Party will not be effective or binding on the other
Party. This Agreement may be amended or modified solely in a writing signed by
an authorized representative of each Party, in accordance with Health Net policy
set forth in Schedule O (Policies and Procedures).

 

  25.4 Governing Law

This Agreement and performance under it shall be governed by and construed in
accordance with the laws of the state of New York without regard to its choice
of law principles.

 

  25.5 Relationship of the Parties

Supplier, in furnishing the Services, is acting as an independent contractor.
Supplier has the sole right and obligation to supervise, manage, contract,
direct, procure, perform or cause to be performed, all work to be performed by
Supplier under this Agreement. Supplier is not an agent or partner of Health Net
and has no authority to represent or bind Health Net as to any matters, except
as expressly authorized in this Agreement. This Agreement establishes a
nonexclusive relationship between the Parties.

 

  25.6 Consents and Approvals

Where approval, acceptance, consent or similar action by either Party is
required under this Agreement, such action will not be unreasonably delayed,
conditioned or withheld unless this Agreement expressly provides that it is in
the discretion of the Party. No approval or consent given by a Party under this
Agreement will relieve the other Party from responsibility for complying with
the requirements of this Agreement, nor will it be construed as a waiver of any
rights under this Agreement (except to the extent, if any, expressly provided in
such approval or consent). Each Party will, at the request of the other Party,
perform those actions, including executing additional documents and instruments,
reasonably necessary to give full effect to this Agreement.

 

  25.7 Waiver

No failure or delay by a Party in exercising any right, power or remedy will
operate as a waiver of that right, power or remedy, and no waiver will be
effective unless it is in writing and signed by an authorized representative of
the waiving Party. If a Party waives any right, power or remedy, the waiver will
not waive any successive or other right, power or remedy that Party may have.

 

  25.8 Remedies Cumulative

Except as otherwise expressly provided in this Agreement, all remedies provided
in this Agreement are cumulative and in addition to and not in lieu of any other
remedies available to a Party under this Agreement, at law, or in equity.

 

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  25.9 References

 

  (a) The section headings and the table of contents used in this Agreement are
for convenience of reference only and will not enter into the interpretation of
this Agreement.

 

  (b) Unless otherwise indicated, section references are to sections of the
document in which the reference is contained. For example, section references in
these Terms and Conditions are to sections of the Terms and Conditions and,
likewise, section references in a Schedule to this Agreement are to sections of
that Schedule.

 

  (c) References to numbered (or lettered) sections of this Agreement also refer
to and include all subsections of the referenced section.

 

  (d) Unless otherwise indicated, references to Schedules to this Agreement also
refer to and include all Exhibits to the referenced Schedule.

 

  25.10  Rules of Interpretation

 

  (a) Unless the context requires otherwise, (i) “including” (and any of its
derivative forms) means including but not limited to, (ii) “may” means has the
right, but not the obligation to do something and “may not” means does not have
the right to do something, (iii) “will” and “shall” are expressions of command,
not merely expressions of future intent or expectation, (iv) “written” or “in
writing” is used for emphasis in certain circumstances, but that will not
derogate from the general application of the notice requirements set forth in
Section 27.3 (Notices) in those and other circumstances, (v) use of the singular
imports the plural and vice versa, and (vi) use of a specific gender imports the
other gender(s).

 

  (b) References in the Agreement to “days” and “years” that do not specifically
refer to Business Days or Contract Years are references to calendar days and
calendar years, unless otherwise provided.

 

  25.11  Order of Precedence

If there is any conflict between this Agreement and any document incorporated by
reference into this Agreement, the Parties shall attempt to read any such
conflicting provisions consistently, however, in the event such a consistent
reading cannot be accomplished, the order of precedence will be as follows:
(a) the General Terms and Conditions and any amendments thereto, (b) the
Schedules, Exhibits and other attachments to this Agreement, and (c) other
documents incorporated by reference.

 

  25.12  Severability

If any provision of this Agreement conflicts with the Law under which this
Agreement is to be construed or if any provision of this Agreement is held
invalid, illegal, or otherwise unenforceable by a competent authority, such
provision will, if possible, be deemed to be restated to reflect as nearly as
possible the original intentions of the Parties in accordance with applicable
Law. In any event, the remainder of this Agreement will remain in full force and
effect.

 

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  25.13  Counterparts

This Agreement may be executed in several counterparts and by facsimile
signature, all of which taken together constitute a single agreement between the
Parties. Each signed counter-part, including a signed counterpart reproduced by
reliable means (including facsimile), will be considered as legally effective as
an original signature.

 

  25.14  Reading Down

If a provision of this Agreement is reasonably capable of an interpretation
which would make that provision valid, lawful and enforceable and an alternative
interpretation that would make it unenforceable, illegal, invalid or void then,
so far as is possible, that provision will be interpreted or construed to be
limited and read down to the extent necessary to make it valid and enforceable.

 

26. DISPUTE RESOLUTION

Any dispute between the Parties arising out of or relating to this Agreement,
including with respect to the interpretation of any provision of this Agreement
or with respect to performance by Supplier or Health Net, will be resolved as
provided in this Section 26 (Dispute Resolution).

 

  26.1 Informal Dispute Resolution

 

  (a) Subject to Section 26.1(b), the Parties initially will attempt to resolve
any dispute arising out of or relating to this Agreement informally in
accordance with the following:

 

  (i) Within ten (10) days after a Party receives notice of a dispute from the
other Party (“Dispute Date”), it will designate a senior representative (i.e., a
person whose rank within the company is superior to, in the case of Supplier,
the Supplier PE, and in the case of Health Net, the Health Net Program Manager)
who does not devote substantially all of his time to performance under this
Agreement, who will offer to meet with the designated senior representative of
the other Party for the purpose of attempting to resolve the dispute amicably.

 

  (ii) The appointed representatives will meet promptly to discuss the dispute
and attempt to resolve it without the necessity of any formal proceeding. They
will meet as often as the Parties deem necessary in order that each Party may be
fully advised of the other’s position. During the course of discussion, all
reasonable requests made by one Party to the other for non-privileged
information reasonably related to the matters in dispute will be honored
promptly.

 

  (iii) The specific format for the discussions will be left to the discretion
of the appointed representatives.

 

  (b) Formal dispute resolution may be commenced by a Party upon the first to
occur of any of the following:

 

  (i) the appointed representatives conclude in good faith that amicable
resolution of the dispute through continued negotiation does not appear likely;

 

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  (ii) thirty-five (35) days have passed from the Dispute Date (this period will
be deemed to run notwithstanding any claim that the process described in this
Section 26.1 (Informal Dispute Resolution) was not followed or completed); or

 

  (iii) commencement of formal dispute resolution is deemed appropriate by a
Party to avoid the expiration of an applicable limitations period or to preserve
a superior position with respect to other creditors, or a Party makes a good
faith determination, including as provided in Section 26.4 (Equitable Remedies),
that a breach of this Agreement by the other Party is such that a temporary
restraining order or other injunctive or conservatory relief is necessary.

 

  26.2 Litigation

For all litigation which may arise with respect this Agreement, the Parties
irrevocably and unconditionally submit (a) to the exclusive jurisdiction and
venue (and waive any claim of forum non conveniens and any objections as to
laying of venue) of the United States District Court for the Central District of
California, or (b) if such court does not have subject matter jurisdiction, to
the Superior Court of the State of California, Los Angeles County in connection
with any action, suit or proceeding arising out of or relating to this
Agreement. The Parties further consent to the jurisdiction of any state court
located within a district that encompasses assets of a Party against which a
judgment has been rendered for the enforcement of such judgment or award against
the assets of such Party.

 

  26.3 Continued Performance

Each Party agrees (a) to continue performing its obligations under this
Agreement while a dispute is being resolved except (and then only) to the extent
performance is prevented by the other Party or the issue in dispute precludes
performance, and (b) not to take any action that intentionally obstructs,
delays, or reduces in any way the performance of such obligations. For the
avoidance of doubt, a good faith dispute regarding invoiced charges and Health
Net’s withholding payment of disputed charges as permitted under this Agreement
will not be considered to prevent Supplier from performing the Services or
preclude performance by Supplier, nor will this Section 26.3 be interpreted to
limit either Party’s right to terminate this Agreement as provided in Section 16
(Termination).

 

  26.4 Equitable Remedies

Each Party acknowledges that a breach of any of its obligations under the
Sections of this Agreement listed below, or its infringement or misappropriation
of any Intellectual Property Rights of the other Party, may irreparably harm the
other Party in a way that could not be adequately compensated by money damages.
In such a circumstance, the aggrieved Party may (in addition to all other
remedies and rights) proceed directly to court notwithstanding the other
provisions of this Section 26 (Dispute Resolution). The following Sections are
subject to this paragraph:

Section 14 (Data Security and Protection), Section 15 (Intellectual Property
Rights), Section 16 (Termination), Section 21 (Confidentiality) and Section 24
(Indemnification);

 

  26.5 Waiver of Jury Trial

THE PARTIES HEREBY UNCONDITIONALLY WAIVE THEIR RESPECTIVE

 

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RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING DIRECTLY OR
INDIRECTLY OUT OF, RELATED TO, OR IN ANY WAY CONNECTED WITH, THE PERFORMANCE OR
BREACH OF THIS AGREEMENT, OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN
THEM. The scope of this waiver is intended to be all encompassing of any and all
disputes that may be filed in any court or other tribunal (including, without
limitation, contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims). THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT, AND RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. In the event of
litigation, this Agreement may be filed as a consent to a trial by the court.

 

  26.6 Disclaimer of Uniform Computer Information Transactions Act

TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, THE PARTIES DISCLAIM AND
NONE OF THIS AGREEMENT SHALL BE SUBJECT TO THE UNIFORM COMPUTER INFORMATION
TRANSACTIONS ACT (“UCITA”) (PREPARED BY THE NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS) AS CURRENTLY ENACTED OR AS MAY BE ENACTED, CODIFIED OR
AMENDED FROM TIME TO TIME BY ANY JURISDICTION. TO THE EXTANT THAT ANY ASPECT OF
THIS AGREEMENT OR ANY LICENSE GRANTED UNDER THIS AGREEMENT IS UNCLEAR OR
DISPUTED BY THE PARTIES AND UCITA, IF APPLIED, WOULD CLARIFY SUCH LICENSE OR
RESOLVE SUCH DISPUTE, THE PARTIES AGREE TO CLARIFY SUCH LICENSE OR RESOLVE SUCH
DISPUTE INDEPENDENTLY OF UCITA BY APPLYING THE INTENT OF THE PARTIES AT THE TIME
THAT THEY ENTERED THIS AGREEMENT.

 

27. GENERAL

 

  27.1 Binding Nature and Assignment

This Agreement is binding on the Parties and their respective successors and
permitted assigns. Neither Party may assign this Agreement or delegate its
rights or obligations under this Agreement, whether by operation of law or
otherwise, without the prior written consent of the other Party, provided
(1) Health Net may assign this Agreement or delegate its rights or obligations
under this Agreement without the prior written consent of Supplier to (i) a
Health Net majority owned Affiliate or (ii) an entity that acquires Control of
Health Net or acquires all or substantially all of Health Net’s business or
assets, and (2) (i) either Party may assign its rights and obligations under
this Agreement to the successor in a merger or acquisition and (ii) Supplier may
assign all or part of its rights to receive payments from Health Net under this
Agreement; provided that in no event shall any such assignment relieve either
Party of their respective obligations under this Agreement. Any attempted
assignment in violation of this Section 27.1 will be void and will constitute a
material breach of this Agreement by the Party attempting the assignment. A
Party assigning this Agreement or delegating its rights or obligations under
this Agreement must provide prompt notice of the assignment or delegation to the
other Party after its effective date.

 

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  27.2 Nondiscrimination

Neither Party shall discriminate against any Beneficiary in the provision of
Services hereunder, whether on the basis of the Beneficiary’s coverage under a
Benefit Program, age, sex, marital status, sexual orientation, race, color,
religion, ancestry, national origin, disability, handicap, health status, source
of payment, utilization of medical or mental health services or supplies, or
other unlawful basis including, without limitation, the filing by such
Beneficiary of any complaint, grievance or legal action against Supplier, Health
Net, or a Health Net Affiliate. The Parties agree to make reasonable
accommodations for Beneficiaries with disabilities or handicaps as required by
law as applicable to each Party.

 

  27.3 Notices

All notices, requests, demands and determinations under this Agreement (other
than routine operational communications), shall be in writing and shall be
deemed duly given (i) when delivered by hand, (ii) on the designated day of
delivery after being timely given to an express overnight courier with a
reliable system for tracking delivery, (iii) six (6) days after the day of
mailing, when mailed by United States mail, registered or certified mail, return
receipt requested and postage prepaid, and addressed as follows:

In the case of Health Net:

Health Net, Inc.

21650 Oxnard Street

Woodland Hills, CA 91367

Attn: Chief Procurement Officer

With Copy To:

Health Net, Inc.

21650 Oxnard Street

Woodland Hills, CA 91367

Attn: General Counsel

In the case of Supplier:

Fernando Morgan

IBM Project Executive, Health Net

12033 Foundation Place

Rancho Cordova CA 95670

With a copy to:

General Counsel,

IBM Global Technology Services

Route 100

Somers, New York 10589

Telephone: 914-766-4165

Facsimile: 914-766-8444

A Party may from time to time change its address or designee for notification
purposes

 

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by giving the other prior written notice of the new address or designee and the
date upon which it will become effective.

 

  27.4 Non-solicitation of Employees

Subject to the provisions of Schedule E, from the Effective Date until
twelve (12) months after completion of its obligations under this Agreement,
Supplier will not solicit or seek to procure the employment of any of Health Net
personnel, either directly or indirectly (other than by general advertising),
without the prior written consent of Health Net. Subject to the provisions of
this Agreement (including Section 16.6(a), Health Net will not solicit or seek
to procure the employment of any of Supplier personnel, either directly or
indirectly (other than by general advertising), until twelve (12) months after
the date that any such Supplier Personnel has ceased performing Services under
this Agreement, without the prior written consent of Supplier.

 

  27.5 Legal Compliance

 

  (a) Each Party agrees at its cost and expense to obtain all necessary
regulatory approvals applicable to its business, to obtain any necessary
licenses or permits for its business and to comply with all Laws applicable to
it in the operation of their respective businesses, including the portions of
laws applicable to it where the law imposes different obligations on the
Parties. (e.g. HIPAA)If a Party is charged with a failure to comply with any
such Laws, and such failure relates to or impacts the Services, it shall
promptly notify the other Party of the charges in writing.

 

  (b) Each Party will bear the risk of and have Financial Responsibility for any
change in Laws applicable to it or its Affiliates, or their respective
businesses. If a change to any Law applicable to Health Net results in the need
for a change to a Service or charges hereunder (the foregoing, a “Regulatory
Change”), Supplier shall make that Regulatory Change as soon as reasonably
possible. The Parties shall seek to agree to the details and cost of the
Regulatory Change in accordance with the Change Control Process. If there is any
disagreement between the Parties regarding any Regulatory Change or potential
Regulatory Change, then: (i) Health Net shall have the right to determine:
(A) whether a Regulatory Change is required; and (B) how Supplier should
implement that Regulatory Change; and (ii) as and if approved by Health Net,
Health Net shall pay Supplier’s reasonably incurred and properly evidenced labor
and materials costs of implementing the Regulatory Change and any adjusted
charges for post-Change on-going Services; provided that if the Regulatory
Change is carried out for other customers of Supplier, Health Net shall only
bear an equitable proportion of Supplier’s reasonably incurred and properly
evidenced labor and materials costs.

 

  27.6 Covenant of Good Faith

Each Party, in its respective dealings with the other Party under or in
connection with this Agreement, will act reasonably and in good faith.

 

  27.7 Public Disclosures

All media releases, public announcements and public disclosures by either Party
relating to this Agreement or the subject matter of this Agreement, including
pro-motional or

 

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marketing material, but not including announcements intended solely for internal
distribution or disclosures to the extent required to meet legal or regulatory
requirements (including as described in Section 21.2(d)) beyond the reasonable
control of the disclosing Party, will be coordinated with and approved by the
other Party prior to release.

 

  27.8 Service Marks

Without the other Party’s prior consent (which may be withheld in such Party’s
discretion and if granted revoked), neither Party shall use the name, service
marks, or trademarks of the other Party.

 

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  27.9 Mutually Negotiated

No rule of construction will apply in the interpretation of this Agreement to
the disadvantage of one Party on the basis that such Party put forward or
drafted this Agreement or any provision of this Agreement.

IN WITNESS WHEREOF, Health Net and Supplier have each caused this Agreement to
be signed and delivered by its duly authorized officer, all as of the date first
set forth above.

 

Health Net, Inc.     International Business Machines Corporation By:    /s/
James E. Woys     By:   /s/ Chris Nicoletti Print Name: James E. Woys     Print
Name: Chris Nicoletti Title: Chief Operating Officer     Title: Vice President,
Global Technologies Date: August 19, 2008     Date: August 19, 2008

 

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SCHEDULE A

SERVICES

 

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SCHEDULE A

SERVICES

Table of Contents

 

1.

  

INTRODUCTION

   5

1.1

  

General

   5

1.2

  

Service Hours

   5

1.3

  

Definitions

   5

1.4

  

Solution Description

   6

1.5

  

Projects

   6

1.6

  

Third Party Managed Contracts

   6

2.

  

CROSS-FUNCTIONAL SERVICES

   8

2.1

  

Overall Responsibilities

   8

2.2

  

Planning and Analysis

   9

2.3

  

Project Management

   10

2.4

  

Requirements Definition

   12

2.5

  

Design Specifications

   13

2.6

  

Asset Acquisition and Management

   13

2.8

  

Integration and Acceptance Testing

   17

2.7

  

Capacity Management

   18

2.8

  

Implementation and Migration

   19

2.9

  

Incident and Problem Management

   20

2.10

  

Operations

   22

2.11

  

Maintenance

   24

2.12

  

Technical Support & Administration

   25

2.13

  

Technical Environment Monitoring and Reporting

   26

2.14

  

Service Level Monitoring and Reporting

   26

2.15

  

Account Management

   27

2.16

  

Configuration Management

   28

2.17

  

Change and Release Management

   29

2.18

  

Software Distribution Management

   31

2.19

  

Training Services

   33

2.20

  

Documentation

   36

2.21

  

Technology Refresh and Replenishment

   36

2.22

  

Storage Management, Data Retention

   39

2.23

  

IT Continuity & Disaster Recovery Services

   42

2.24

  

Environment & Facilities Support

   52

2.25

  

Procurement Services

   52

2.26

  

De-Installation, Disposal, and Repurposement Services

   55

3.

  

DATA CENTER SERVICES

   59

3.1

  

Overall Responsibilities

   59

3.2

  

Planning & Analysis

   61

3.3

  

Engineering/Development

   61

3.4

  

Integration and Testing

   61

3.5

  

Implementation and Migration

   61

3.6

  

Operations and Administration

   62

3.7

  

Technical Support and Administration

   65

3.8

  

Collaborative Computing and Support System Management Services

   66

 

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3.9

  

Remote Access Facilities

   68

3.10

  

Database Administration

   69

3.11

  

Middleware Administration

   72

3.12

  

Messaging Services

   74

4.

  

DATA NETWORK SERVICES

   75

4.1

  

Planning and Analysis

   76

4.2

  

Asset Acquisition and Management

   76

4.3

  

Engineering/Development

   76

4.4

  

Integration and Testing

   77

4.5

  

Implementation and Migration

   77

4.6

  

Circuit Support Services

   77

4.7

  

Operations and Administration

   78

4.8

  

Network Performance Management

   80

4.9

  

Local Area Network (LAN) Services

   80

4.10

  

Wide Area Network (WAN) Services

   81

4.11

  

Metropolitan Area Network (MAN) Services

   81

4.12

  

Virtual Private Network (VPN) Services

   81

5.

  

VOICE NETWORK SERVICES

   82

5.1

  

General Obligations

   82

5.2

  

Planning and Analysis

   86

5.3

  

Asset Acquisition and Management

   86

5.4

  

Implementation and Migration

   86

5.5

  

Operations and Administration

   87

5.6

  

Desk Phone Service

   90

5.7

  

Long Distance Service

   93

5.8

  

Voice Mail Service

   95

5.9

  

Online Directory Service

   97

5.10

  

Teleconferencing Service

   98

5.11

  

Inbound Toll Free / Call Center Service

   99

5.12

  

Automated Call Distribution (ACD) Service

   101

5.13

  

Integrated Voice Response (IVR) Service

   103

5.14

  

Video Conference Service

   104

5.15

  

Web Conference Services

   105

6.

  

END USER SERVICES

   105

6.2

  

General Obligations

   106

6.3

  

Printer Support Services

   108

6.4

  

PDA Support Services

   108

6.5

  

Software Deployment and Management Services

   109

6.6

  

Implementation and Migration

   110

6.7

  

Operations and Administration

   111

6.8

  

Configuration Management/Change Control

   112

6.9

  

Repair Services

   113

6.10

  

Custom Services

   113

7.

  

HELP DESK SERVICES

   114

7.2

  

General Obligations

   114

7.3

  

Planning & Analysis

   115

7.4

  

Operations & Administration

   116

7.5

  

Service Request and Trouble Ticket Management

   117

7.6

  

Remote Desktop Management

   119

7.7

  

User Administration

   120

7.8

  

Installs, Moves, Adds, Changes (IMACs)

   121

7.9

  

Self Help

   121

7.10

  

Meetings and Conferences

   121

7.11

  

Monitoring and Reporting Services

   122

 

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7.12

  

Exception Requests

   122

8.

  

ENTERPRISE SECURITY MANAGEMENT SERVICES

   122

8.1

  

Introduction

   123

8.2

  

Security Compliance and Regulatory

   123

8.3

  

Infrastructure Protection

   127

8.4

  

System Currency

   135

8.5

  

Identity and Access

   139

8.6

  

Security Firewall Management Services

   142

8.7

  

Security Engineering Services

   143

8.8

  

Additional Security Terms

   146

LIST OF EXHIBITS

 

Refresh Schedule

   Exhibit A-1

Transition Plan

   Exhibit A-2

Transformation Plan

   Exhibit A-3

Solution Description

   Exhibit A-4

Disaster Recovery Contracts

   Exhibit A-5

Health Net Federal Services Requirements

   Exhibit A-6

Change Control Process

   Exhibit A-7

Citrix Enabled Applications

   Exhibit A-8

Asset Tracking System

   Exhibit A-9

Project Framework

   Exhibit A-10

In-Flight Projects

   Exhibit A-11

Sample System Decommissioning Checklist

   Exhibit A-12

Facilities Services Responsibility Matrix

   Exhibit A-13

 

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1. INTRODUCTION

 

  1.1 General.

 

  (a) This Schedule A (Services) describes, among other things, the information
technology Services to be performed and delivered by Supplier under this
Agreement; the service delivery environments from which Supplier will perform
and delivery of the Services; and the solution that Supplier will implement or
use in performing the Services.

 

  (b) The Services are required for Health Net’s business operations in the
United States, including its territories.

 

  (c) References to specific resources (e.g., tools, systems) in this Schedule A
that are used by Supplier in performing the Services, and where Supplier
implements any such successor or replacement resources, such references shall be
deemed to include such successor or replacement resources.

 

  (d) Supplier shall manage and perform the Services in a tightly integrated
manner (with appropriate consideration given at all times to the impact of
change to all Services) without regard to technology platform.

 

  (e) All Equipment, Software and Services shall meet the configuration,
performance, information system security, and standardization requirements as
defined by the Health Net IT architectural standards.

 

  (f) Supplier shall provide such information as may be reasonably requested by
Health Net from time to time to support Health Net’s investigation into
potential violations of Health Net’s policies and procedures.

 

  1.2 Service Hours.

 

Service

  

Hours of Operation

1. DATA CENTER SERVICES**    24 hours per day, seven days per week 2. DATA
NETWORK SERVICES**    24 hours per day, seven days per week 3. VOICE NETWORK
SERVICES**    24 hours per day, seven days per week 4. END USER SERVICES   
06:00–18:00 local time, Monday–Friday, with 24 hours per day, seven days per
week oncall support for PDA Support Services and VIP Support Services 5. HELP
DESK SERVICES    Twenty-four hours per day, seven days per week 6. ENTERPRISE
SECURITY MANAGEMENT SERVICES    Twenty-four hours per day, seven days per week

 

  1.3 Definitions.

 

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  (a) Capitalized terms not defined in this Schedule A shall have the meaning
given them in Schedule U (Glossary) or elsewhere in the Agreement.

 

  1.4 Solution Description.

 

  (a) Attached hereto as Exhibit A-3 is a draft, high level technical solution
for Health Net, as of the Effective Date, describing how Supplier will implement
the Services, meet Health Net’s business requirements as described in the
Agreement (including this Schedule and the Exhibits attached hereto), and
otherwise provide the Services (“Solution Description”). Within sixty (60) days
following the Effective Date, Supplier shall be responsible for revising,
elaborating on and fully describing, and finalizing the Solution Description.
The detailed Solution Description may not modify or change the scope of Services
to be provided under, or any other terms or conditions of, the Agreement, and
shall be provided to Health Net for review, comment and approval. Such detailed
Solution Description, including reasonable comments or suggestions of Health
Net, shall be incorporated into the Technology Plan described in Section 17.6 of
the Agreement. Supplier shall perform the Services in accordance with the
Solution Description portion of the Technology Plan.

 

  (b) All Services being provided from a non-Health Net Facility must be
provided on dedicated Equipment and Software that is physically separate from
(e.g., rack-level separation) Equipment and Software that is not being used to
provide the Services and is not used to provide services to other customers of
Supplier; provided however that Equipment and Software that’s sole use is for
the management of the Services (e.g., GSMRT (Supplier global reporting system))
may be provided from shared infrastructure.

 

  1.5 Projects.

As part of the Services, Supplier shall complete and manage Health Net Projects
in accordance with Exhibit A-10 (Project Framework). The In-Flight Projects
include those identified in Exhibit A-11 (In Flight Projects).

 

  1.6 Third Party Managed Contracts.

Supplier shall be responsible for managing Managed Third Parties in accordance
with the requirements of this Agreement. Based upon guidance and direction from
Health Net, Supplier shall act in accordance with Health Net’s direction and
guidance at all times with regard to this responsibility. Without limiting the
generality of the foregoing, Supplier’s responsibility regarding Managed Third
Parties shall include:

 

  (a) Services Solution. Supplier shall provide solution management services for
the overall solution comprising the Services and related services provided to
Health Net by Supplier and the Managed Third Parties (the “Services Solution”).

 

  (b)

Contract Management. Supplier shall be responsible for managing, facilitating,
and directing communications between and among Health Net, Supplier, the Managed
Third Parties, and other third parties. This

 

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responsibility shall include, if requested by Health Net, being Health Net’s
single point of contact for all issues and communications with any Managed Third
Party, including issues regarding regulatory requirements and changes, problem
management and resolution, payment and any contractual matters.

 

  (c) Technology Management. Supplier shall maintain an up-to-date view of the
services provided by Managed Third Parties that are reasonably related to the
Services in order to stay informed of current technology and costs for such
technology and trends.

 

  (d) Performance Management. Supplier shall manage the performance of Managed
Third Parties, including: (A) monitoring, overseeing and verifying that the
Managed Third Parties are performing all of their contracted services and
complying with all of their obligations to Health Net that are being managed by
Supplier, in the required manner and within required time frames; (B) receiving,
and verifying the accuracy of, all invoices to be paid by Health Net to Managed
Third Parties relating to such managed services; and (C) oversight of any
changes to services provided by Managed Third Parties, including verifying that
such modifications are performed within required time frames and in accordance
with the Managed Third Party’s obligations, and providing progress reports to
Health Net at regular intervals.

 

  (e) Reporting Services. Supplier shall report to Health Net, on no less than a
quarterly basis, the status on the activities described in this Section 1.6,
including: (i) recommending to Health Net alternative courses of action with
regard to (A) particular Managed Third Parties, (B) any modification to the
overall combination of services comprising the Services Solution, and (C) any
additional services from Supplier or third parties from which the Services
Solution could benefit; and (ii) assisting Health Net with a plan to exploit
market changes for the benefit of the Health Net group.

 

  (f) Contract Negotiation.

 

  (i)

Except as provided in Section 1.6(f)(ii) below, Health Net shall have the sole
right to negotiate contracts (or amendments to contracts) with existing or
potential Managed Third Parties; provided however, that at Health Net’s request,
Supplier shall negotiate such contracts or amendments on Health Net’s behalf, or
otherwise assist Health Net in such negotiations. If Supplier is negotiating on
Health Net’s behalf, (A) Health Net may direct and participate in the
negotiations as desired by Health Net, (B) Supplier shall not enter into any
contractual relationship with a third party on behalf of any member of Health
Net without Health Net’s consent (which shall be at Health Net’s sole
discretion), and, (C) if the third party will be providing a service that will
impact any Service Levels, any commitment to provide services from such third
party shall be at a performance level consistent with any such Service Levels.
In such negotiations Health Net shall be represented solely by counsel (whether
internal or external) selected and retained by Health Net, and

 

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Supplier shall not have the authority to, and shall not, retain counsel or other
professional advisers for Health Net.

 

  (ii) With respect to contracts with Managed Third Parties that are assigned to
the Managed in ASC Asset Category (as identified in Schedules I, J and N based
on the type of contract, or in Exhibit C-10 for contracts not yet identified in
Schedules I, J or N), Supplier shall have the right to participate in
negotiations of those portions of the contracts that relate directly to the
charges to be paid under those contracts. For example, Supplier has the right to
participate in the negotiations of the actual maintenance fees under a
maintenance contract. However, Supplier shall not have the right to participate
in the negotiations of the limitations of liability provisions, service levels,
or other similar provisions that may directly or indirectly affect the risk
profile under the agreement. If Supplier elects to exercise its rights under
this Section, Supplier must (A) allow Health Net to participate in the
negotiations as desired by Health Net, and (B) use Commercially Reasonable
Efforts to reach an agreement on these provisions that would be satisfactory to
Health Net if Health Net was the Party with Financial Responsibility for paying
the amounts under the contract (including by avoiding any unreasonable increase
in payments at the end of the Term that would need to be paid by Health Net if
the contract were to be extended beyond the Term).

 

  (g) Partial Responsibility. For any particular (i) Managed Third Party or
(ii) service provided by a Managed Third Party, Health Net may require that
Supplier perform only a subset of the responsibilities required under this
Section 1.6, as opposed to all of the responsibilities required hereunder.

 

  (h) Health Net Obligations. Supplier shall know, and use Commercially
Reasonable Efforts to inform Health Net of the performance obligations of a
member of Health Net under Managed Third Party contracts.

 

2. CROSS-FUNCTIONAL SERVICES

Supplier shall provide the following cross-functional Services (the “Operations
and Maintenance Services” or “O&M Services”) as such Services relate to the Data
Center Services, the Data Network Services, the Voice Network Services, the End
User Services, the Help Desk Services, the Enterprise Security Management
Services and any other Services the Parties may add to the scope of the
Agreement. In the event that Health Net terminates the provision of any of the
Service Towers pursuant to the Agreement, Supplier shall continue to provide the
Services set forth in this Section 2 as such Services relate to the remaining
Services.

 

  2.1 Overall Responsibilities.

The following are general responsibilities that Supplier will be responsible for
providing, in accordance with Health Net guidelines

 

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  (a) Performing all tasks and responsibilities for management documentation and
management reporting in a form and format reasonably requested by Health Net;
and

 

  (b) Performing the configuration, parameter changes, related testing, and
implementation of Software tools used to provide the Services.

 

  2.2 Planning and Analysis.

Planning and analysis Services are the Functions associated with the research of
new technical trends, products and services, such as Equipment, Software, and
transmission facilities that offer opportunities to improve the efficiency and
effectiveness of the Services, as well as for competitive business advantage.
Supplier shall perform the planning and analysis Services, including those
Functions listed in the roles and responsibilities table below, except for those
Functions that are expressly identified as retained Health Net responsibilities
in the roles and responsibilities table below.

Table 1. Planning and Analysis Roles and Responsibilities

 

Planning and Analysis Roles and Responsibilities

   Supplier    Health
Net

1.      Define Health Net business, functional, availability and service
requirements at the enterprise level.

      X

2.      Propose planning and analysis activities to improve the Services,
including improvements for operational efficiencies and risk mitigation
strategies.

   X   

3.      Review and approve services and standards for planning and analysis
activities.

      X

4.      Recommend policies and procedures to perform planning and analysis
activities.

   X   

5.      Review, authorize, and approve policies and procedures for the
performance of planning and analysis activities.

      X

6.      Continuously monitor technical trends through independent research;
document and report on products and services with potential use for Health Net.

   X   

7.      In addition to, and without limiting the generality of, Supplier’s
obligations with respect to the development of the Annual Technology Plan (as
set forth in Section 17.6 of the General Terms and Conditions, perform up to
fifty (50) hours per quarter of feasibility studies for the implementation of
new technologies (including security-related technologies) that best meet Health
Net business needs and cost, performance and quality objectives; present the
findings of such feasibility studies to Health Net on a quarterly basis.

   X   

8.      Conduct annual technical and business planning sessions to establish
standards, architecture and project initiatives.

      X

9.      Participate in annual technical and business planning sessions to
establish standards, architecture and project initiatives.

   X   

10.    Conduct planning for technology Refresh and upgrades.

   X   

11.    Participate in planning for technology Refresh and upgrades.

      X

12.    Conduct semiannual technical reviews.

   X   

13.    Conduct semiannual workshops on industry trends and best practices.

   X   

 

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Planning and Analysis Roles and Responsibilities

   Supplier    Health
Net

14.    Develop and execute content and procedures for conducting user
satisfaction surveys.

   X   

15.    Review and approve content and procedures for conducting user
satisfaction surveys.

      X

16.    Participate by collaborating with Health Net and other third parties as
required, in application security planning.

   X   

17.    Perform and document planning and analysis for infrastructure support as
reasonably required by application plans.

   X   

18.    Develop configuration settings within infrastructure, for prototype
application, to demonstrate support of application requirements

   X   

19.    Provide infrastructure cost to Health Net and schedule estimates during
application planning phases.

   X   

20.    Review and approve infrastructure planning and analysis, as documented in
support of application plans.

      X

 

  2.3 Project Management.

Exhibit A-10 (Project Framework) sets forth the process to be followed by the
Parties (a) in establishing the cost and time frames of Projects, and (b) in
managing Projects throughout their life-cycle. Supplier shall implement and
utilize industry standard project management methodologies and processes for
all projects (chargeable and non-chargeable) commensurate with the duration,
scope and criticality of the project to successfully complete the project
including by developing and adhering to processes and documentation requiring or
addressing the following:

 

  (a) Planning projects, including:

 

  (i) Forming project teams;

 

  (ii) Defining the specific activities that must be performed to produce the
various project deliverables;

 

  (iii) Sequencing the activities and documenting dependencies;

 

  (iv) Estimating the time needed to complete individual activities;

 

  (v) Analyzing the activity sequences, activity durations, and resource
requirements;

 

  (vi) Performing risk management planning;

 

  (vii) Determining which resources (e.g., people, hardware, and materials) and
which quantities of each should be used to perform project activities;

 

  (viii) Assigning the human resources needed to work on the project;

 

  (ix) Developing an estimate of the resource costs required to complete the
project;

 

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  (x) Identifying which quality standards are relevant to the project and how
they can be satisfied;

 

  (xi) Identifying, documenting, and assigning project roles, responsibilities,
and reporting relationships;

 

  (xii) Determining the information and communications needs of the
stakeholders;

 

  (xiii) Identifying quantitative and qualitative risks and documenting the
characteristics of each;

 

  (xiv) Developing procedures and techniques to enhance opportunities and to
reduce threats to the project;

 

  (xv) Determining what to procure, how much to procure, and when to procure;

 

  (xvi) Developing project plans by taking the results of the above and
incorporating them into consistent, coherent documents that can be used to guide
both project execution and project control. The project plans include planning
inputs, historical information, organizational policies, constraints, and
assumptions;

 

  (xvii) Submitting draft project plans to Health Net for approval; and

 

  (xviii) Revising draft project plans as directed by Health Net.

 

  (b) Monitoring and controlling projects, including:

 

  (i) Managing personnel assigned to projects;

 

  (ii) Implementing appropriate project management methodology including the use
of approved project management tools;

 

  (iii) Preparing performance, financial, utilization and status reports;

 

  (iv) Providing appropriate access to information and project management
templates;

 

  (v) Coordinating changes across/within projects;

 

  (vi) Controlling changes to project scope;

 

  (vii) Controlling changes to project schedules;

 

  (viii) Controlling changes to project budgets;

 

  (ix) Determining if projects comply with relevant quality standards and
identifying ways to eliminate unsatisfactory performance; and

 

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  (x) Tracking identified risks, monitoring residual risks, identifying new
risks and executing risk plans and evaluating their effectiveness in reducing
risk;

 

  (c) Executing projects, including:

 

  (i) Executing project plans by performing the activities therein;

 

  (ii) Delivering projects;

 

  (iii) Evaluating overall project performance on a regular basis to confirm
projects will satisfy the relevant quality standards;

 

  (iv) Developing individual and group skills/competencies to enhance project
performance;

 

  (v) Conducting acceptance activities (e.g., testing and quality assurance
activities);

 

  (vi) Closing out projects and resolving any open items; and

 

  (vii) Providing administrative closure by generating, gathering, and
disseminating information and formalizing phase or project completion, including
evaluating projects and compiling lessons learned for use in planning future
projects or phases.

Utilization of project managers and project management processes required as
part of a chargeable Project shall be chargeable in connection with such Project
in accordance with Section 5 of Schedule C (Charges). Utilization of project
managers and project management processes required by the Project governance
process shall be non-chargeable when related to non-chargeable project work. If
Health Net requests a level of project management for a non-chargeable project
in excess of that required by the Project governance process, then the
additional project management hours required to meet Health Net’s request would
be separately chargeable in accordance with Section 5 of Schedule C (Charges).

 

  2.4 Requirements Definition.

Requirements definition Services are the Functions associated with the
assessment and definition of user functional, performance, availability,
maintainability and disaster recovery needs and the required security
requirements to meet user, regulatory, client and company policy requirements.
Supplier shall perform the requirements definition Services, including those
Functions listed in the roles and responsibilities table below, except for those
Functions that are expressly identified as retained Health Net responsibilities
in the roles and responsibilities table below.

Table 2. Requirements Definition Roles and Responsibilities

 

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Requirements Definition Roles and Responsibilities

   Supplier    Health Net

1.      Propose functional, performance, availability, maintainability and DR
requirements and establish standards (for example, support processes and
procedures).

   X   

2.      Review and approve Supplier proposed requirements and standards.

      X

3.      Conduct interviews, group workshops, and surveys to determine user
functional, performance, availability, maintainability and disaster recovery
(e.g., RTO and RPO) requirements.

      X

4.      Participate in requirements gathering groups and panels as requested by
Health Net.

   X   

5.      Document all requirements and standards in agreed to formats (e.g.,
system specifications, data models, network design schematics).

   X   

6.      Approve all requirements and standards documents.

      X

 

  2.5 Design Specifications.

Design specification Services are the Functions and deliverables that translate
requirements (functional, performance, availability, disaster recovery and
security) into detailed technical system specifications. Supplier shall perform
the design specification Services, including those Functions listed in the roles
and responsibilities table below, except for those Functions that are expressly
identified as retained Health Net responsibilities in the roles and
responsibilities table below.

Table 3. Design Specifications Roles and Responsibilities

 

Design Specification Roles and Responsibilities

   Supplier    Health Net

1.      Develop and document technical design plans and environment
configuration based on Health Net standards, technical architecture and
functional, performance, availability, maintainability, security and disaster
recovery requirements.

   X   

2.      Propose system upgrade, replacement and conversion requirements,
including for all Equipment, Software and other IT Infrastructure.

   X   

3.      Review and approve design plans, technical architecture
changes/enhancements and system upgrade, replacement and conversion
requirements.

      X

4.      Participate in site surveys for design efforts as reasonably requested
by Health Net.

   X   

5.      Provide design documentation for all proposed technical architecture and
environment configuration.

   X   

6.      Approve design documentation.

      X

 

  2.6 Asset Acquisition and Management.

 

  (a)

Acquisition and management Services are the Functions associated with the
pricing, evaluation (technical and costing), selection, acquisition, and ongoing
management of Equipment and Software, including inventory management and
inventory tracking (e.g., via barcode), support for centralized warranty and
license management, configuration control of

 

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desktops, workstations and network Software to include automatic electronic
distribution of changes, modifications and version updates of supported Software
(i.e., Software distribution), and Equipment and Software redeployment and
decommissioning. Supplier shall perform the asset acquisition and management
Services, including those Functions listed in the roles and responsibilities
table below, except for those Functions that are expressly identified as
retained Health Net responsibilities in the roles and responsibilities table
below.

Table 4. Asset Acquisition and Management Roles and Responsibilities

 

Asset Acquisition and Management Roles and Responsibilities

   Supplier    Health Net

8.      Develop acquisition policies and procedures.

   X   

9.      Review and approve acquisition policies and procedures.

      X

10.    Identify pre-approved vendors.

      X

11.    Maintain list of pre-approved vendors.

   X   

12.    Approve selected, strategic vendors.

      X

13.    Develop and issue asset acquisition bid requests as required and approved
by Health Net.

   X   

14.    Demonstrate that best efforts are being pursued to obtain best pricing
(e.g., use of pooled government procurement mechanisms).

   X   

15.    Evaluate proposals against clearly defined objective criteria.

   X   

16.    Negotiate purchase or lease contracts for Equipment, Software and
Services for which Supplier has Financial Responsibility, including for network
Services-related contracts.

   X   

17.    When requested by Health Net, negotiate purchase or lease contracts for
Equipment, Software and Services for which Health Net has Financial
Responsibility, including for network Services-related contracts.

   X   

18.    Review and confirm that all new asset requests comply with established
Health Net IT standards and architectures.

   X   

19.    Manage the asset ordering, procurement and delivery processes in
compliance with Health Net procurement and acceptance processes.

   X   

20.    Manage/track purchase and service orders.

   X   

21.    Coordinate delivery and installation of new products and services, as
required.

   X   

22.    Review and approve selection of Equipment and Software.

      X

23.    Update and maintain an asset inventory database. Exhibit A-9 (Asset
Tracking System) describes what information Health Net currently tracks in the
asset management tool as of the Effective Date. Supplier shall continue to track
at least this information

   X   

24.    Propose an asset inventory tracking methodology.

   X   

25.    Review and approve asset inventory tracking methodology.

      X

26.    Track all Equipment and Software (location, asset ID, serial number,
financial disposition like owner, lease, capital, expense).

   X   

27.    Track and advise Health Net in a timely manner of expiration and renewal
requirements for Health Net Equipment and Software licenses, leases, and service
contracts.

   X   

28.    Provide asset inventory reports to Health Net as requested.

   X   

 

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Asset Acquisition and Management Roles and Responsibilities

   Supplier    Health Net

29.    Provide Health Net End Users read-only access to the asset management
database and the ability to generate reports from the asset inventory database.

   X   

30.    Conduct periodic quality reviews of asset inventory database and tracking
methodology procedures.

   X   

31.    Terminate, dispose of, and/or relocate assets as needed; provide
disposition reports to Health Net.

   X   

 

  (b) Supplier should also comply with the following processes when
decommissioning systems:

 

  (i) For all system decommissions, Supplier (a) shall respond to questions from
Health Net related to the decommissioning, including those listed in Exhibit
A-12 (Sample System Decommissioning Questionnaire), (b) shall prepare a
decommissioning plan and such plan must be approved by Health Net prior to
commencing any decommissioning activities, (c) shall not turn off a system until
Supplier receives Health Net’s written approval of the system decommissioning,
and (d) Supplier shall follow the approved decommissioning plan at all times
when decommissioning a system.

 

  (ii) With respect to Data Network, Voice Network and End User Services
systems, Supplier shall perform the following:

 

  (A) Check Equipment with asset tags for original entity ownership in the asset
tracking database;

 

  (B) Perform disk scrubs in accordance with Department of Defense procedures
and requirements and using a scrubbing tool that is compliant with such
Department of Defense procedures and requirements for all drives (related to
both End User Resources and data center Equipment) and revert salvaged network
and telecom Equipment to manufacturer’s default settings;

 

  (C) Store disk scrub certifications for reference by Health Net, as required.
In the event the scrub utility can not be run on a particular machine, the
physical disk drive must be removed from the system and destroyed;

 

  (D) Equipment information should be recorded for reference and reporting to
Health Net;

 

  (E) Equipment transfer must be recorded and stored for reference and reporting
to Health Net; and

 

  (F) Once a product has been salvaged, Health Net should be notified via a
report per the current salvage agreement.

 

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  (iii) With respect to data center systems, Supplier shall perform the
following:

 

  (A) Preparation steps for servers:

 

  (i) A request will be sent from Health Net that the system is no longer
needed, or the Supplier may recognize that the system is no longer needed and
will initiate contact with the teams using the system. Approval from Health Net
is required before any system decommissioning.

 

  (ii) After approval is given to decommission the system, a formal change
management request should be submitted following the change management process
described in Section 2.17(b) to be followed by the Supplier. The Supplier needs
to maintain an audit trail of official support/approval from Health Net to
decommission the system.

 

  (iii) As it will be necessary to perform “decommission” backups on the system,
a final backup of the system should be scheduled and conducted, and it needs to
be verified that the backup is working prior to the decommission day.

 

  (iv) No system can be shut down without proper notification to all users of
the system in accordance with Health Net’s notification requirements, as will be
identified in the decommissioning plan.

 

  (B) Decommission – Initial Shutdown

Supplier should perform two full decommission backups per Health Net’s backup
policy. The two backups need to be on different tapes. The backups should be
verified as completed without any errors before continuing.

 

  (C) Decommission – Final Steps

 

  (v) No less than thirty-five (35) days but not more than forty-five (45) days
after the system is shutdown (and no users requested that the system be
restarted), any and all DNS entries related to the system need to be removed.
Supplier shall perform disk scrubs in accordance with Department of Defense
procedures and requirements and using a scrubbing tool that is compliant with
such Department of Defense procedures and requirements for all drives (related
to both End User Resources and data center Equipment) and revert salvaged data
center Equipment to manufacturer’s default settings;

 

  (vi) In the event the users request the system be restarted the Supplier shall
cease the relevant decommissioning and notify the initiator of the applicable
Change Notice to determine next steps.

 

  (vii) Asset should be marked as decommissioned in the asset management system
for reference by and reporting to Health Net.

 

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  (iv) For the avoidance of doubt, Supplier shall be responsible for
decommissioning systems as requested by Health Net, including system
decommissioning required upon the expiration of an Equipment lease (including
all ongoing lease-related decommissioning activities being performed as of the
Effective Date).

 

  2.8 Integration and Acceptance Testing.

Integration and testing Services are the Functions necessary to validate that
the individual Health Net Equipment and Software configured with or added to the
infrastructure work together cohesively and perform Functions as intended and in
accordance with the design and test plans. Supplier shall perform the
engineering and development Services, including those Functions listed in the
roles and responsibilities table below, except for those Functions that are
expressly identified as retained Health Net responsibilities in the roles and
responsibilities table below.

Table 5. Integration and Testing Roles and Responsibilities

 

Integration and Testing Roles and Responsibilities

   Supplier    Health Net

1.      Develop infrastructure integration and testing policies and procedures.

   X   

2.      Contribute to application related integration and testing policies and
procedures as reasonably requested by Health Net

   X   

3.      Review and approve integration and testing policies and procedures and
Deliverables.

      X

4.      Conduct testing for all new and modified Equipment, Software and
Services, including system, performance and integration testing and other
testing activities as specified in the Procedures Manual and/or specific test
plans.

   X   

5.      Evaluate all new and modified Equipment, Software and Services for
compliance with Health Net security policies, regulations and procedures.

   X   

6.      Develop system acceptance criteria.

   X   

7.      Review and approve system acceptance criteria.

      X

8.      Perform all user acceptance testing for new and modified Equipment,
Software or Services.

      X

9.      Stage new and modified Equipment, Software and Services to smoothly
transition into existing environment.

   X   

10.    Subject to the Change Control Process, perform modifications and
performance-enhancement adjustments to the IT Infrastructure, Systems Software
and utilities as a result of Changes to Health Net architectural standards.

   X   

11.    Evaluate all new and modified Equipment, Software and Services for
compliance with Health Net Service Levels.

   X   

12.    Support, manage and maintain integration test and user acceptance test
environments, including support of the code/configuration/migration management
tools (installing the tool, applying the patches).

   X   

13.    Provide input to application test plans (e.g integration, stress,
regression, system tests if applicable).

   X   

 

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Integration and Testing Roles and Responsibilities

   Supplier    Health Net

14.    Conduct infrastructure defect triage meetings to identify the root cause
of any issues related to integration and acceptance testing.

   X   

15.    Participate in application defect triage meetings.

      X

16.    Resolve/correct infrastructure defects found as a result of any testing
efforts that include the infrastructure.

   X   

17.    Install new/upgraded software or execute new services to smoothly
transition from Health Net Systems Integration Test environment to User
Acceptance Test environment.

   X   

18.    As reasonably required by Health Net, make available data provided by
Health Net onto appropriate systems to support application test scenarios.

   X   

19.    Execute on Health Net’s application test-to-production turnover
requirements.

   X   

20.    Develop test-to-production infrastructure turnover requirements.

   X   

21.    Review and approve test-to-production turnover requirements.

      X

 

  2.7 Capacity Management.

Capacity management Services are those Functions related to ensuring that the
capacity of the IT Infrastructure matches the evolving demands of the business
in the most cost-effective and timely manner. Capacity management Services
include the monitoring of performance and throughput of IT services and
supporting IT components, undertaking tuning activities, understanding current
demands and forecasting for future requirements, influencing the demand for
resources and developing a capacity plan which will meet demand and Service
Levels. Supplier shall perform the capacity management Services, including those
Functions listed in the roles and responsibilities table below, except for those
Functions that are expressly identified as retained Health Net responsibilities
in the roles and responsibilities table below.

Table 6. Capacity Management Roles and Responsibilities

 

Capacity Management Roles and Responsibilities

   Supplier    Health Net

1.      Identify future business requirements that will affect capacity
requirements.

      X

2.      Establish and maintain comprehensive capacity management planning
process at the enterprise, system and IT component level taking into account
current and new requirements, including those from new or modified Software.

   X   

3.      Review and approve capacity management planning process.

      X

4.      Develop and implement tools that allow for the effective
monitoring/trending of IT Infrastructure, Software and IT components performance
and resource utilization.

   X   

5.      Continually monitor IT resource usage and promptly identify capacity
issues; provide to Health Net capacity trending information to allow for
forecasting future capacity requirements.

   X   

6.      Assess Incidents/Problems and make appropriate capacity IT changes to
improve Services performance.

   X   

 

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Capacity Management Roles and Responsibilities

   Supplier    Health Net

7.      Perform tuning activities that enable optimized use of existing IT
resources and minimize Health Net costs to deliver Services at the agreed
Service Levels.

   X   

8.      Provide adequate capacity within the IT environment to meet Service
Levels and other performance requirements, taking into account daily, weekly and
seasonal variations in capacity demands.

   X   

9.      Proactively provide to Health Net predictive capacity forecasts through
the use of modeling, trending, baselining and other techniques.

   X   

10.    Develop and propose scenarios for addressing capacity constraints and
define associated costs, risks and benefits of each.

   X   

11.    Review scenarios for addressing capacity constraints and approve
scenario(s) that best addresses Health Net needs.

      X

 

  2.8 Implementation and Migration.

Implementation and migration Services are the Functions associated with the
installation of new and upgraded Equipment and Software components (including
for both commercial and custom developed Software), including the coordination
and implementation of routine installation moves, adds and changes. Supplier
shall perform the implementation and migration Services, including those
Functions listed in the roles and responsibilities table below, except for those
Functions that are expressly identified as retained Health Net responsibilities
in the roles and responsibilities table below.

Table 7. Implementation and Migration Roles and Responsibilities

 

Implementation and Migration Roles and Responsibilities

   Supplier    Health Net

1.      Recommend migration and conversion plans and redeployment policies and
procedures, including for Equipment, Software, and data.

   X   

2.      Review and approve all migrations, conversions and redeployment policies
and procedures, including for Equipment, Software, and data.

      X

3.      Perform Equipment migration and redeployment plans in accordance with
the Change and Release Management Services described in Section 2.16(b).

   X   

4.      Conduct pre-installation site surveys, as required.

   X   

5.      Install new or enhanced functions or features, Equipment, Software,
peripherals and configurations (including network identification cards).

   X   

6.      Coordinate implementation and migration support activities with Health
Net and the other Service Towers.

   X   

7.      Receive and track requests for IMACs.

   X   

8.      Confirm the requirements and scope of the IMAC request. Contact the user
and schedule an agreed time for the work to take place, coordinate through
change management.

   X   

9.      Perform appropriate pre-installation surveys and post-implementation
testing for all installs, moves, adds and changes.

   X   

10.    Perform IMACs.

   X   

11.    Verify completion of IMACs by contacting the user to confirm
satisfaction, update appropriate configuration/other databases to reflect IMAC
information.

   X   

 

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Implementation and Migration Roles and Responsibilities

   Supplier    Health Net

12.    Perform data migrations and execute conversion (including by running
scripts and monitoring the conversion activities to confirm proper execution).

   X   

13.    Monitoring, documenting, and reporting on physical (e.g., Equipment) and
logical (e.g., Internet Protocol [IP] address) IMACs and re-installations,
regardless of the number of users, instances or systems.

   X   

 

  2.9 Incident and Problem Management.

 

  (a) Incident and Problem management Services include the Functions associated
with restoring normal service operation in a manner that minimizes adverse
impact on business operations as a result of Incidents and Problems (including
Incidents and Problems caused by errors in the IT Infrastructure). Incident and
Problem management Services also include Functions associated with preventing
the recurrence of Incidents, including by performing root cause analysis of
Incidents and initiating actions to improve or correct the situation.

 

  (b) Supplier will develop, implement, and maintain a root cause analysis
(“RCA”) process and perform the activities required to diagnose, analyze,
recommend, and take corrective measures to prevent recurring Incidents, Problems
and/or trends. Root cause analysis process exists to understand or prevent
recurring Problems and/or trends which could result in Problems.

 

  (i) Supplier will perform the following:

 

  (A) identify, record, track and manage the Incident and/or Problem through
service restoration, including by: (1) determining the Priority classification
of the Incident and executing the Problem management process accordingly, and
(2) determining the scope of the Incident and/or Problem;

 

  (B) Identify the root cause of such Problems or failures, where possible;

 

  (C) Identify and remedy the failure, and track and report on any consequences
of the failure;

 

  (D) Provide Health Net with a written report detailing the cause of and
procedure for correcting such failure; provide updates on a monthly basis until
closure; and

 

  (E) Substantiate to Health Net that all reasonable actions have been taken to
prevent recurrence of such failure and notify Health Net that the service has
been restored.

 

  (c) The following table identifies the underlying roles and responsibilities
associated with root cause analysis activities:

 

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Table 8. Root Cause Analysis Roles and Responsibilities

 

Root cause Analysis Roles and Responsibilities

   Supplier    Health Net

1.      Flag all Priority 1 Incidents and Problems and those Priority 2
Incidents and Problems identified by Health Net as requiring root cause
analysis.

   X   

2.      Perform root cause analysis for all Priority 1 Incidents and Problems,
and those Priority 2 Incidents and Problems identified by Health Net; recommend
appropriate resolution action, where/whenever possible.

   X   

3.      Track and report on progress of all root cause analysis efforts to
confirm that root cause analysis is performed and reported on (Incident reports
/ trouble tickets to remain open until root cause analysis report is completed
and submitted) and report that all reasonable actions have been taken to prevent
future reoccurrence.

   X   

4.      Provide Health Net with a written report detailing the cause of and
procedure for correcting such failure; provide updates on a monthly basis until
closure.

   X   

5.      Document to Health Net that all reasonable actions have been taken to
prevent recurrence of such failure.

   X   

6.      Review and approve actions for resolution of Problems as reported in
root cause analysis recommendations.

      X

 

  (d) Supplier shall also perform all other Incident and Problem management
Services, including those Functions listed in the roles and responsibilities
table below, except for those Functions that are expressly identified as
retained Health Net responsibilities in the roles and responsibilities table
below.

Table 9. Incident and Problem Management Roles and Responsibilities

 

Incident and Problem Management Roles and Responsibilities

   Supplier    Health Net

1.      Recommend Incident and Problem management policies and procedures.

   X   

2.      Approve Incident and Problem management policies, procedures and
operational turnover requirements.

      X

3.      Establish operations and service management quality assurance and
control programs.

   X   

4.      Approve operations and service management quality assurance and control
programs.

      X

5.      Perform quality assurance and control programs.

   X   

6.      Develop policies for the use of remote control tools for help desk use
in maintenance and troubleshooting.

   X   

7.      Review and approve policies for the use of remote control tools for help
desk use in maintenance and troubleshooting.

      X

8.      Develop plans and procedures for the use of remote control tools in
accordance with defined policies.

   X   

 

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Incident and Problem Management Roles and Responsibilities

   Supplier    Health Net

9.      Coordinate user support activities with the other Service Towers.

   X   

10.    Classify Incidents and Problems by Priority (as defined in Schedule B
(Service Levels)). Establish Incident/Problem workflow, escalation,
communication and reporting processes, including for all levels of support.

   X   

11.    Review and approve Incident and Problem classification (and re-classify
Incident and Problem Priority Levels in Health Net’s discretion), and workflow,
communication, escalation and reporting processes.

      X

12.    Utilize, configure, operate and maintain an Incident and Problem
management system; create a ticket for all Incidents and Problems in the
Incident and Problem management system.

   X   

13.    Provide Health Net End Users and Health Net third party contractors with
access to the Incident and Problem management tool.

   X   

14.    Respond to requests from the help desk and provide updates to the help
desk on Incident and Problem resolution status.

   X   

15.    Manage entire Incident and Problem lifecycle including detection,
diagnosis, scoping, repair, and recovery. Confirm user requirements were met and
End User satisfaction prior to closing an Incident or Problem. Provide Incident
and Problem “situation” management, including on a 24 hours per day, 7 days per
week, 52 weeks per year, basis as necessary to meet the Service Levels and other
performance standards set forth in the Agreement.

   X   

16.    Manage efficient workflow of Incidents and Problems, including the
involvement of third party providers.

   X   

17.    Periodically review the state of open Incidents and Problems and the
progress being made in addressing such Incidents and Problems.

      X

18.    Participate in Incident and Problem review sessions and provide listing
and status of Incidents and Problems categorized by Priority classification or
other categorization as may be requested by Health Net (e.g., by Service Tower).

   X   

19.    Respond to system status notifications as required in escalation and
workflow processes.

   X   

20.    Issue reports on IT service area performance and Incident and Problem
statuses and trends.

   X   

21.    Identify possible product enhancement opportunities for improved
operational performance and potential cost savings.

   X   

22.    Approve Projects to implement operational improvements.

      X

 

  2.10 Operations.

Operations Services are the Functions associated with providing a stable IT
Infrastructure and to effectively and efficiently perform operation procedures
so that the Services meet or exceed Service Levels and other performance
standards required by the Agreement. Supplier shall perform the operations
Services, including those Functions listed in the

 

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roles and responsibilities table below, except for those Functions that are
expressly identified as retained Health Net responsibilities in the roles and
responsibilities table below.

Table 10. Operations Roles and Responsibilities

 

Operations Roles and Responsibilities

   Supplier   

Health Net

1.      Recommend operations policies and procedures, operational Documentation
requirements.

   X   

2.      Provide and implement enterprise system management tools to monitor the
IT Infrastructure, diagnose events and assist in resolution of Problems.

   X   

3.      Install and configure enterprise system management tools.

   X   

4.      Perform event management monitoring of the Services to detect abnormal
conditions or alarms, log abnormal conditions, analyze the condition and take
corrective action.

   X   

5.      Manage Equipment, Software, and Services to meet the Service Levels and
other performance requirements, and to minimize Health Net resource
requirements.

   X   

6.      Provide and implement scheduling tools for managing/automating job
execution, job workflow processes, file exchange functions and print management.

   X   

7.      Monitor progress of scheduled jobs and identify and resolve issues in
scheduling process and track issues in the Problem management tool

   X   

8.      Recommend operational Documentation requirements (Run Books, Contact
Lists, Operations scripts etc.).

   X   

9.      Review and approve operations policies and procedures and operational
Documentation requirements.

      X

10.    Execute production activities in accordance with the Procedures Manual

   X   

11.    Develop operational Documentation in compliance with operational
Documentation requirements approved by Health Net.

   X   

12.    Maintain inventories of desktop and laptop Equipment (e.g., spares parts,
replacement Equipment.) to support Incident and Problem resolution.

   X   

13.    Perform routine verification tasks to confirm processes and procedures
are being adhered to in supporting operations.

   X   

14.    Develop templates for operational reports (Daily, Weekly, Monthly) that
provides status of operational activities, production issues, and key
operational metrics.

   X   

15.    Review and approve templates for operational reports.

      X

 

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Operations Roles and Responsibilities

   Supplier   

Health Net

16.    Perform those Functions necessary to promote code from non-production
environments to production environments and, as requested by Health Net on an ad
hoc basis, to other non-production environments, including by coordinating with
Health Nets application maintenance and development teams as necessary.

   X   

17.    Perform data migration(load) from existing systems to new systems, by
electronic methods

   X   

18.    Provide support of the code/configuration management tools (installing
the tool, applying the patches)

   X   

19.    Perform backup and associated rotation of media.

   X   

20.    Archive data media at a secure offsite location.

   X   

21.    Provide capability to recover (and recover as requested by Health Net)
the following archived data from media: (1) archived data created during the
Term, (2) archived data that was created prior to the Term but that (a) is
stored on media that is readable using the then current Equipment, (b) is stored
on media that is not readable using the then-current Equipment, but was created
no more than thirty six (36) months before replacement of Equipment that renders
such archived data unreadable by the then current Equipment, or (c) otherwise
required pursuant to Section 24.2(d)(ii) of the General Terms and Conditions.

   X   

22.    Perform quality checks to (a) confirm that backup data is properly being
generated and, at Health Net’s request, provide reporting verifying backup data
integrity and (b) verify that appropriate backup data is being moved offsite
within the agreed upon timeframes.

   X   

23.    Recover files, file system or other data required from backup media as
required or requested by Health Net.

   X   

24.    Support application issues, with analyses of the operating systems across
relevant platforms, hardware, Middleware with log reviews, traces,
reconstructing execution path of transactions, analyzing historical system logs
and resultant configuration changes to operating systems, hardware, Middleware
etc. as needed

   X   

 

  2.11 Maintenance.

 

  (a) Maintenance Services are those Functions associated with the maintenance
and repair of Equipment and Software, including performing “break-and-fix”
activities, implementing commercial product patches, “bug fix,” service pack,
and performing system/Software upgrades. Supplier shall perform all scheduled
maintenance in accordance with the Change and Release Management Services
described in Section 2.16(b). All unscheduled maintenance will be tracked using
the approved best practices based Problem Management process. Supplier shall
perform the maintenance Services, including those Functions listed in the roles
and responsibilities table below, except for those Functions that are expressly
identified as retained Health Net responsibilities in the roles and
responsibilities table below.

 

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Table 11. Maintenance Roles and Responsibilities

 

Maintenance Roles and Responsibilities

   Supplier    Health Net

1.      Recommend maintenance and repair policies and procedures.

   X   

2.      Review and approve maintenance and repair policies and procedures.

      X

3.      Provide maintenance coverage for all Equipment and Software, at least at
the level provided by Health Net immediately prior to the Effective Date.

   X   

4.      Provide maintenance and/or break/fix support for the Equipment and
Software.

   X   

5.      Dispatch repair technicians to the point-of-service location if
necessary.

   X   

6.      Perform diagnostics on Equipment, and Software.

   X   

7.      Install manufacturer field change orders, service packs, firmware,
Software maintenance releases, and Software upgrades; provided however, that
open source Software can only be installed and used in the Health Net
environment with prior Health Net approval.

   X   

8.      Perform Software distribution and version control, both electronic and
manual.

   X   

9.      Replace defective Equipment and Software and perform preventive
maintenance.

   X   

10.    Conduct maintenance and parts management and monitoring during warranty
and off-warranty periods.

   X   

11.    Perform routine system management, including system tuning.

   X   

12.    Manage availability and performance of all Equipment and Systems
Software.

   X   

13.    On a timely basis, proactively notify Health Net of changes and upgrades,
and major patch installs to Systems Software

   X   

14.    Perform maintenance for the System Software, including application of
preventative maintenance and program temporary fixes provided to Supplier by the
Systems Software providers, to correct defects in accordance with the change
management and release managed procedures.

   X   

 

  2.12 Technical Support & Administration.

Technical support and administration Services are those Functions associated
with providing technical resources required for the tuning of Systems Software
and utilities for optimal performance, including technical resources with
expertise to provide Level 2 and Level 3 technical assistance, and to support
Health Net Service Recipients. Supplier shall perform the technical support and
administration Services, including those Functions listed in the roles and
responsibilities table below, except for those Functions that are expressly
identified as retained Health Net responsibilities in the roles and
responsibilities table below.

 

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Table 12. Technical Support Roles and Responsibilities

 

Technical Support Roles and Responsibilities

   Supplier    Health Net

1.      Recommend technical support policies and procedures.

   X   

2.      Participate in defining and approve technical support policies and
procedures.

      X

3.      Test, install, and tune technical environment Equipment, Software,
peripherals and Services.

   X   

4.      Provide technical assistance for Level 2 and Level 3 End User and
production support as requested Health Net and/or Supplier-provided help desk.

   X   

 

  2.13 Technical Environment Monitoring and Reporting.

Monitoring and reporting Services are those Functions associated with monitoring
and reporting on the Services. Supplier shall perform the monitoring and
reporting Services, including those Functions listed in the roles and
responsibilities table below, except for those Functions that are expressly
identified as retained Health Net responsibilities in the roles and
responsibilities table below.

Table 13. Monitoring and Reporting Roles and Responsibilities

 

Network Monitoring and Reporting Roles and Responsibilities

   Supplier    Health Net

1.      Develop and document requirements and policies for monitoring and
reporting.

   X   

2.      Develop and document monitoring and reporting requirements and
procedures, including availability thresholds, report formats, notification
processes.

   X   

3.      Approve network monitoring and reporting requirements, policies and
procedures.

      X

4.      Provide and implement tools for monitoring Equipment and Software.

   X   

5.      Implement measures for proactive monitoring and self-healing
capabilities to limit outages.

   X   

6.      To the extent that the following can be accomplished utilizing automated
monitoring tools or processes, monitor availability of Equipment and Software on
a twenty-four hours per day, seven days per week basis and track and report
status of availability (including network activities and Problems).

   X   

7.      Dispatch on-site staff to Health Net Facilities to perform break/fix,
maintenance and Problem resolution activities.

   X   

8.      Provide technical assistance (e.g., respond to inquiries) as needed to
the help desk, End Users and external entities using Health Net network.

   X   

9.      Coordinate and communicate planned and unplanned outages with Health Net
business partners and third party vendors.

   X   

10.    Log all Incidents and Problems with the help desk and Incident and
Problem management teams.

   X   

 

  2.14 Service Level Monitoring and Reporting.

Service Level monitoring and reporting Services are those Functions associated
with monitoring of IT delivery and support services to assess how Services are
being delivered

 

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with respect to Service Levels. Supplier shall report system management
information (e.g., performance metrics, and system accounting information) to
the designated Health Net representative in a format agreed to by Health Net.
Supplier shall perform the Service Level monitoring and reporting Services,
including those Functions listed in the roles and responsibilities table below,
except for those Functions that are expressly identified as retained Health Net
responsibilities in the roles and responsibilities table below.

Table 14. Service-Level Monitoring and Reporting Responsibilities

 

Service Level Monitoring Roles and Responsibilities

   Supplier    Health Net

1.      Measure, analyze, and provide management reports on performance relative
to Service Level requirements.

   X   

2.      Develop Service Level improvement plans.

   X   

3.      Review and approve improvement plans.

      X

4.      Implement improvement plans.

   X   

5.      Report on Services performance improvement results.

   X   

6.      Coordinate Service Level monitoring and reporting for Managed Third
Party contracts.

   X   

7.      Review and approve Service Level metrics and performance reports.

      X

 

  2.15 Account Management.

Account management Services are those Functions associated with the ongoing
management of the Services environment. Supplier shall perform the account
management Services, including those Functions listed in the roles and
responsibilities table below, except for those Functions that are expressly
identified as retained Health Net responsibilities in the roles and
responsibilities table below.

Table 15. Account Management Roles and Responsibilities

 

Account Management Roles and Responsibilities

   Supplier    Health Net

1.      Develop and document account management reporting procedures.

   X   

2.      Approve account management reporting procedures.

      X

3.      Develop a “user” guide that defines Supplier’s Services (and how the
Service Recipients can use the Services) in a format that is easily understood
by the Service Recipients.

   X   

4.      Develop a service ordering process that clearly defines to the End User
how to order, change or delete services.

   X   

5.      Develop and document criteria and formats for administrative, service
activity and Service Level reporting.

   X   

6.      Approve a “user” guide, service ordering process and all reporting
criteria and formats.

      X

7.      Develop and implement Customer Satisfaction program for tracking the
quality of Service delivery to End Users across the Services.

   X   

8.      Approve Customer Satisfaction program and monitor results.

      X

 

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Account Management Roles and Responsibilities

   Supplier    Health Net

9.      Measure, analyze and report system and service performance relative to
requirements.

   X   

10.    Prepare performance and other Service Level reports and provide as
scheduled.

   X   

11.    Prepare and provide activities reports.

   X   

12.    Prepare reports on statistics and trends.

   X   

13.    Perform operations inspections and other Service-related inspections to
verify quality and accuracy of the Services.

   X   

 

  2.16 Configuration Management.

 

  (a) With respect to data center and Data Network Equipment and Software,
configuration management Services are those Functions associated with providing
a logical model of the infrastructure or a service by identifying, controlling,
maintaining and verifying versions of configuration items in existence. Such
model should account for all IT assets and configurations, provide accurate
information on configurations, provide a demonstrated methodology for Incident,
Problem, change and release management and to verify configuration records
against the IT Infrastructure and correct any exceptions. Supplier shall perform
the configuration management Services, including those Functions listed in the
roles and responsibilities table below, except for those Functions that are
expressly identified as retained Health Net responsibilities in the roles and
responsibilities table below.

Table 16. Configuration Management Roles and Responsibilities

 

Configuration Management Roles and Responsibilities

   Supplier    Health Net

1.      Recommend configuration management policies, and procedures.

   X   

2.      Utilize and maintain configuration management data structure(s) and
system configuration charts for managing configuration items, including for
Equipment, Software, associated Documentation, including version control notes,
operation Documentation.

   X   

3.      Utilize and maintain configuration management tools.

   X   

4.      Manually enter or upload configuration data into configuration
database(s).

   X   

5.      Establish process for tracking configuration changes by date, time,
individual(s) performing change, purpose of change, and description of change.
Tracking must also include the state of configuration items (e.g., development,
test, production, retired).

   X   

6.      Modify configuration databases to reflect any modifications to
configuration items and confirm that appropriate change management processes are
followed

   X   

7.      Establish process interfaces to Incident and Problem management, change
management, technical support, maintenance and financial accounting processes.

   X   

8.      Establish appropriate authorization controls for modifying configuration
items. Verify compliance with Software licensing.

   X   

 

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Configuration Management Roles and Responsibilities

   Supplier    Health Net

9.      Establish guidelines for physical and logical separation between
development, test and production and the process for deploying and back out of
configuration items.

   X   

10.    Establish configuration baselines as reference points for rebuilds, and
providing ability to revert to stable configuration states.

   X   

11.    Establish a process for verifying the accuracy of configuration items,
adherence to configuration management process and identifying process
deficiencies.

   X   

12.    Perform configuration planning, including (i) develop a strategy and
configuration for CPU, DASD, and tape; (ii) develop a plan for systems
availability, flexibility and performance; (iii) evaluate alternative
configurations and recommending solutions on an annual basis and otherwise as
appropriate; and (iv) recommend standard configurations for Equipment and
Systems Software.

   X   

13.    Provide Health Net with configuration management reports as requested by
Health Net, and in a format and containing the content reasonably requested by
Health Net.

   X   

14.    Review and approve configuration management policies and procedures and
provide recommended changes to meet Health Net requirements (including business
needs, other internal requirements and regulatory requirement.

      X

15.    Manage configuration management process and confirm accuracy of
configuration data

   X   

 

  (b) Supplier shall track and maintain configuration information (for both
Equipment and Software configuration information) for End User Resources in
Altiris (or a substantiality similar tool approved by Health Net) by utilizing
agents that sit on the network connected devices to automatically populate the
configuration information. With respect to Equipment, information to be tracked
includes that information identified in Exhibit A-9 (Asset Tracking System) that
relates to configuration information of End User Resources (all other
information in Exhibit A-9 will be tracked as part of Supplier’s asset
management responsibilities).

 

  2.17 Change and Release Management.

 

  (a) Change and release management Services include both change management
Services and release management Services, which are inter-related and
complementary.

 

  (b) Change management Services (“CM”) are those Functions associated with
utilizing standardized methods and procedures for efficient and prompt handling
of all changes, in order to minimize the impact of change upon service quality
and consequently to improve the day-to-day operations of the organization. CM
covers all aspects of managing the introduction and implementation of changes,
including their impacts on IT system(s), and the management processes, tools,
and methodologies designed and utilized to support the IT systems. CM includes
the following process steps:

 

  (i) Request process

 

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  (ii) Recording/Tracking process

 

  (iii) Prioritization process

 

  (iv) Responsibility assignment process

 

  (v) Impact assessment process

 

  (vi) Review / Approval process

 

  (vii) Implementation process

 

  (viii) Verification (test) process

 

  (ix) Release process

 

  (x) Closure process

 

  (c) Release management Services (“RM”) are those Functions associated with
taking a holistic view of a change to an IT service and considering all aspects
of a release, both technical and non-technical together. RM includes the
planning for and oversight of the successful rollout of Software and Equipment,
and designing and implementation of efficient procedures for distribution and
installation of changes. As part of performing the release management Services,
Supplier should perform those Functions necessary so that (i) changes are
traceable, secure and that only authorized and tested versions are installed,
(ii) changes are implemented in a controlled manner in accordance with the
Procedures Manual, (iii) exact execution and back-out plans are understood and
executed as needed, and (iv) that master copies of new versions are secured in
the definitive Software library and configuration databases are updated (such
Software library and configuration databases is to be provided, supported and
maintained by Supplier).

 

  (d) Supplier shall perform the change and release management Services,
including those Functions listed in the roles and responsibilities table below,
except for those Functions that are expressly identified as retained Health Net
responsibilities in the roles and responsibilities table below.

Table 17. Change and Release Management Roles and Responsibilities

 

Change and Release Management Roles and Responsibilities

   Supplier    Health Net

1.      Recommend change and release management policies, and procedures
including operational turnover procedures, back out plans, training requirements
etc.

   X   

2.      Establish change classifications (impact, priority, risk) and change
authorization process.

      X

3.      Approve change and release management procedures and policies

      X

4.      Document and classify proposed changes to the environment, analyze cost,
risk impact of those changes and establish release management plans for major
changes and submit such Documentation to Health Net for approval.

   X   

 

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Change and Release Management Roles and Responsibilities

   Supplier    Health
Net

5.      Develop and maintain a schedule of approved changes and provide a plan
to track success, impact of change and provide to Health Net for review

   X   

6.      Schedule and conduct change management meetings to include a review of
proposed changes, plan to track success, and the impact of implemented change;
provide agenda to Health Net prior to the meeting outlining which specific
changes should be discussed

   X   

7.      Authorize and approve changes and the change schedule

      X

8.      Review release management details and alter as appropriate to meet the
needs of Health Net (back out plan, go/no go decision)

      X

9.      Notify affected End Users of the timing and impact and impact of changes

      X

10.    Implement changes and adhere to detailed release plans

   X   

11.    Modify configuration items, asset management items to reflect changes

   X   

12.    Execute operational turn-over procedures

   X   

13.    Verify that the implemented changes meet objectives and do not have
negative impacts on the service delivery environment or on Health Net’s business

   X   

14.    Monitor changes and report results of changes to Health Net.

   X   

15.    Conduct user acceptance tests as required

      X

16.    Perform quality control processes

   X   

 

  2.18 Software Distribution Management.

 

  (a) Without limiting Supplier’s obligations set forth in Section 2.17,
Supplier shall also perform the software distribution management Services
described in this section (as such Services apply to software distribution
across all Service Towers, including Data Center Services).

 

  (b) Supplier will distribute software products, which can include application
releases, system/operating system updates, software patches or other software
(self-developed, purchased or licensed applications, or utility software), to
target systems for all Health net application environments including ABS, MC400;
and if necessary to End Users at different locations. Health Net’s software
release types may include:

 

  (i) Full Release (All software components from the release are built, tested,
and implemented together.)

 

  (ii) Delta Release (includes only those software components within the Release
unit that have actually changed or are new since the last full or delta
release.)

 

  (iii) Package Release (individual releases, which may be full units, delta
releases, or both, are grouped together to form Package Releases.) Supplier will
execute each component in the release as required per instructions provided by
Health Net.

 

  (iv) Permanent Temporary Fix (emergency fix)

 

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  (c) Supplier will use a software library as the source for distribution (i.e.,
distribute each software item from the software library). With respect to the
software library, Supplier will:

 

  (A) Support the availability, uptime and administration of such software
library.

 

  (B) Maintain in such software library a trackable version control of all
software to be deployed.

 

  (C) Store software for as long as it is required by Health Net, as submitted
and registered by Health Net teams.

 

  (D) Control each software item (release, version, and package guidelines) per
Health Net and other related third parties’ recommendations

 

  (d) Supplier will perform all software control and distribution activities, in
accordance with the change and release management obligations described in this
section, including:

 

  (i) using software distribution packages such as MKS, SCLM, HN-Move (or
similar functionality). Supplier will also support, if necessary, distribution
of packaged releases using interpreters such as the Java Virtual Machine, Perl,
or with a particular version of an operating system distribution.

 

  (ii) supporting both manual installs and managed installs, as required by
Health Net, or third parties, including:

 

  (A) Installing software products to target systems and desktops, reliably and
efficiently;

 

  (B) Deploying any kind of software including applications written in Java, C++
etc and other technologies used by Health Net applications development teams;

 

  (C) Installing, removing or configuring software products on remote computers
(servers) or desktops within a LAN via a deployment tool such as MacroVision or
ZenWorks or SCCM

 

  (D) Installing and configuring operating systems for servers, desktops and
laptops; and

 

  (E) Providing scheduling, installing (without rebooting, where possible) and
provide support for non Windows Installer setups, when such install is
practicable;

Provided however, that Supplier shall only be responsible for performing a
reasonable number of manual installs on End User workstations.

 

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  (e) As needed, promptly initiating required remediation strategies post
deployment of a software product and notifying Health Net and any involved third
parties of such remediation efforts. Supplier should complete the software
distribution remediation strategy, seeking coordination as required from Health
Net and any involved third parties and report successful completion accordingly
to them.

SDM Roles and Responsibilities

 

Planning and Analysis Roles and Responsibilities

   Supplier    Health Net

•        Review and approve Supplier recommended procedures for distribution and
installation of software products and related changes to IT systems

      X

•        Communicate and manage expectations to the customer during planning and
rollout of releases.

      X

•        Contribute input (as related to the Services) to software release
content and rollout plan for the release, as requested by Health Net or other
involved third parties.

   X   

•        Implement successful rollout of software releases per Health Net’s
controls from Change Management and production control policies and procedures

   X   

•        Ensure that all master copies of all software are secured in the
Application Software Library and that the CMDB is updated

   X   

•        Coordinate with relevant Health Net groups and other third parties as
needed, for a successful distribution of software, including interaction with
Health net’s Release management group, Interaction with Production Support
Infrastructure team

   X   

•        Stage new and upgraded software or services to smoothly transition from
Health Net System testing to SIT

   X   

•        Execute new and upgraded, software or services to smoothly transition
from Health Net System testing to SIT

   X   

•        Executing Code promotions

   X   

•        Package Code for move to next staging environment

   X   

•        Implementation plan for move from SIT to UAT environment

   X    X

•        Stage new and upgraded, software or services to smoothly transition
from Health Net SIT to UAT

   X   

•        Execute new and upgraded, software or services to smoothly transition
from Health Net SIT to UAT

   X   

•        Code build for move to next staging environment from UAT

   X   

•        Implementation plan for move from UAT to Production environment

   X    X

 

  2.19 Training Services.

Training Services are the Functions associated with the improvement of knowledge
of the receipt of the Services for Health Net and the Service Recipients and the
delivery of Services for Supplier Personnel. Supplier shall provide the training
Services, including the following activities:

 

  (a) Ongoing Supplier Personnel Training

 

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Ongoing Supplier Personnel training Services are the Functions associated with
the improvement of Supplier personal skills through education and instruction
for Supplier’s staff, including the Transitioned Employees. Supplier shall
perform the ongoing Supplier Personnel training Services, including:

 

  (i) developing and implementing knowledge transfer procedures that allows for
more than one Supplier Personnel to understand key components of the business
and technical environment;

 

  (ii) developing, implementing and documenting training requirements that
support the ongoing provision of Services, including providing refresher courses
as needed and ongoing instruction on new functionality;

 

  (iii) providing training classes to remain current with systems, Software,
features and functions in order to improve Service performance skills (e.g.
respond to help desk inquiries);

 

  (iv) performing disaster recover education, awareness and staff training;

 

  (v) performing analysis of the Health Net environment to identify the
appropriate sets of skills, training, and experience needed by Supplier
Personnel, including the help desk staff , and

 

  (vi) implementing such training to address those needs identified in the
Health Net environment.

 

  (b) Ongoing Health Net Service Recipient Training

Ongoing Health Net Service Recipient training Services are the Functions
associated with the improvement of Health Net Service Recipients receipt of the
Services through education and instruction the Health Net Service Recipients.
Supplier shall perform the ongoing Health Net Service Recipient training
Services, including:

 

  (i) instructing Service Recipients on the provision of Supplier Services
(e.g., “rules of engagement”, requesting Services, etc.);

 

  (ii) developing, implementing and maintaining a knowledge database;

 

  (iii) providing training to Service Recipients (upon request by Health Net)
for technological changes related to the Services that impact such Service
Recipients (e.g., new systems or functionality, etc.), including to facilitate
Health Net’s full exploitation of all relevant functional features;

 

  (iv) providing training and support to Health Net technical and business unit
employees for toll-free routing changes that are available during emergencies
and other events that require call routing changes;

 

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  (v) providing ad hoc training for users unfamiliar with the video conferencing
system;

 

  (vi) proposing training for Health Net personnel, including classroom style
and computer-based training, to improve “how-to-use” skills related to IT
service area systems and Software, including standard COTS Software;

 

  (vii) upon reasonable prior written notice, performing technical support for
Health Net training rooms located at Campus or Metro Health Net Facilities (as
designated in Schedule F) , including by confirming network connectivity,
verifying that the specified Equipment and Software are installed and available
to support the training (and resolve issues, if any, with such Equipment and
Software and network connectivity);

 

  (viii) performing disaster recover education and awareness training related to
the TBCP;

 

  (ix) maintaining Health Net Intranet-based training course catalog and
training schedules;

 

  (x) maintaining Health Net Intranet-based online class registration

 

  (xi) maintaining copies of training materials and Software manuals on Health
Net Intranet; update such training materials as necessary to keep them current
based on Changes in the technology and environments; and

 

  (xii) providing online guides for reference on self-help (technical support,
FAQs) and training.

 

  (c) Health Net Required Training

Supplier Personnel are required to take the following Health Net-provided
training (administered online via Health Net’s HR link):

 

  (i) HIPAA: An Overview;

 

  (ii) Business Code of Conduct at Health Net (Ethics);

 

  (iii) The Painful Price of Healthcare Fraud;

 

  (iv) Getting the Records Straight;

 

  (v) Health Net General Compliance;

 

  (vi) Medicare Part D: Fraud, Waste and Abuse (for all associates whose job
functions cover or may cover Medicare Part D); and

 

  (vii) Other training courses that Health Net requires its employees or
contractors to take, as reasonably requested by Health Net.

 

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Each Supplier Personnel shall complete the above training within sixty (60) days
after being assigned to the Health Net account, and annually thereafter.

 

  2.20 Documentation.

 

  (a) “Documentation Services” means those Functions associated with developing,
revising, maintaining, reproducing, and distributing Documentation in hard copy
and/or electronic form. Supplier shall perform the Documentation Services,
including those Functions listed in the roles and responsibilities table below,
except for those Functions that are expressly identified as retained Health Net
responsibilities in the roles and responsibilities table below.

 

  (b) Types of Documents covered by the Documentation Services include:

 

  (i) Document system specifications and configurations, data center
interconnection topology and network diagrams;

 

  (ii) Standard operating procedures (boot, failover, spool management, batch
processing, backup, etc.);

 

  (iii) Policies, procedures, production & maintenance schedules and job
schedules;

 

  (iv) System specifications and Documentation;

 

  (v) End User Documentation;

 

  (vi) Self-help resources; and

 

  (vii) Network system specifications and topologies (for example, router
configurations, firewall policies, routing diagrams/IP addressing tables,
hardware/Software listings, etc.).

Table 18. Documentation Roles and Responsibilities

 

Documentation Roles and Responsibilities

   Supplier    Health
Net

1.      Recommend Documentation requirements and formats

   X   

2.      Conduct, at its option, regular reviews of the Documentation

      X

3.      Review and approve Documentation requirements and formats as appropriate

      X

4.      Develop and maintain Documentation in agreed format for support of
activities throughout the life cycle of Services as appropriate (including for
each of the document types listed above)

   X   

5.      Subject to the confidentiality requirements set forth in Section 21 of
the General Terms and Conditions, provide such additional information as
reasonably requested to support Health Net documentation requirements (e.g.
DIACAP documentation) and Health Net proposal efforts.

   X   

 

  2.21 Technology Refresh and Replenishment.

 

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  (a) General.

 

  (i) Supplier shall keep the Equipment, Software and other technologies used by
Supplier in performing the Services current and updated for the proper
performance and delivery of the Services in accordance with the Service Levels.

 

  (ii) Without limiting the generality of Section 2.21(a)(i), unless otherwise
requested by Health Net and subject to Health Net’s approval where changes in
related systems are involved, Supplier shall Refresh (as defined below)
Equipment in accordance with Exhibit A-1 and the refresh matrix contained
therein (collectively, the “Equipment Refresh Schedule”). “Refresh” means
replacing existing Equipment, or upgrading existing Software, as applicable,
with new assets that reflect then-current technology or versions, including any
new features or functionality contained in such technology.

 

  (iii) Within ninety (90) days after the Effective Date, Health Net will will
(1) list all Software products in Health Net’s environment, (2) identify the
versions of such Software currently operating in Health Net’s environment
(“Existing Versions”), and (3) complete the “Currency Requirement” column in
Schedule J with the ongoing currency requirements for such Software (“Currency
Requirement”).

 

  (A) Without limiting the generality of Section 2.21(a)(i) and subject to
Section 2.21(a)(iii)(B) and Health Net’s Financial Responsibility obligations
set forth in Schedule S, Supplier shall maintain all Software, including
maintaining Software patch levels, in accordance with the Currency Requirements
for each Software item, unless otherwise specified by Health Net. For example,
if Schedule J identifies for a particular piece of Software, that the currency
requirement is N-1, Supplier shall maintain such Software to within one
(1) major version of the most current version of such Software, unless otherwise
specified by Health Net. In this regard, and subject to Health Net’s Financial
Responsibility obligations set forth in Schedule S, Supplier will install and
implement new versions of Software (including new features and functionality
contained in the new versions) for no additional charge.

 

  (B) In the event that for a particular piece of Software, the Existing Version
is older than the version that would be required by the Currency Requirement for
such Software, then Health Net, at its option, may (1) authorize a Project to
bring such Software to a specified currency level, or (2) lower the Currency
Requirement of such Software until such time as Health Net elects to authorize a
Project to bring such Software to a higher currency level.

 

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  (iv) Supplier will support multiple releases of Software; provided, however,
that in the event any third-party licensor no longer supports a release, then at
Health Net’s option, Supplier shall either (a) upgrade such Software to a
release level such third-party licensor supports; or (b) if Health Net directs
Supplier to continue using the unsupported release, use Commercially Reasonable
Efforts to continue to support such release. If Health Net elects to continue
using an unsupported release, provided Supplier complies with its obligations
under this paragraph, Supplier shall be excused from any failure to perform in
accordance with the Service Levels to the extent caused by the lack of such
third-party licensor support for such Software.

 

  (b) Refresh Responsibilities.

Supplier’s responsibilities with respect to technology Refresh shall include the
following:

 

  (i) Performing the Functions and processes required to support the Refresh of
Equipment and Software in accordance with Exhibit A-1 (Technology Refresh), the
Software Currency Requirements specified above in Section 2.21(a)(iii), and the
applicable Annual Refresh Plan defined below, including:

 

  (A) performing planning and associated change event management, and Problem
management as necessary;

 

  (B) assigning qualified, dedicated project managers to manage Refresh
activities;

 

  (C) deinstalling, installing, reinstalling, configuring staging, and testing,
as applicable Equipment and Software as necessary to complete Refresh; and

 

  (D) restoring, as required, any data backed up during the deinstall process.

 

  (ii) Identifying opportunities to deploy new technology for Health Net and
proactively bringing proposals to Health Net for review;

 

  (iii) Deploying new Equipment technology and Services to meet Health Net’s
business requirements;

 

  (iv)

Specifying in each annual implementation plan for the Technology Plan, a
detailed schedule identifying the specific items of Equipment and Software to be
Refreshed, proposed configurations and versions for the replacement Equipment
and Software, and the month in which they will be Refreshed (“Annual Refresh
Plan”). Supplier shall incorporate reasonable comments from Health Net and
provide a final Annual Refresh Plan within ten (10) Business Days of receiving
Health Net’s

 

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comments. Supplier shall also coordinate the production, approval by Health Net,
Documentation and distribution of the Annual Refresh Plan;

 

  (v) Providing accurate and reliable inventory records for Equipment and
Software installed during the Refresh process, and updating the applicable asset
management systems with those records; and

 

  (vi) Minimizing End User downtime during the Refresh process by implementing a
set of industry standard “best practices” processes available and effective
tools.

 

  2.22 Storage Management, Data Retention.

 

  (a) Backup and Restore. Supplier shall be responsible for:

 

  (i) Maintaining, updating, and implementing backup and restore processes and
procedures so as to recover Software (and the resources used to store data
created by such Software), Health Net Data, and other data from an outage or
corruption in a timely manner. Such procedures and processes shall provide for
the following: (A) incremental daily backup of data and Software (i.e., backup
of Software only to the extent modified since the most recent backup), as well
as full weekly and monthly backup of data and Software on production systems and
on non-production systems (e.g., development systems) as provided in
Section 2.22(d)(iii), below; (B) other backups as described in
Section 3.1(a)(vi) or elsewhere in this Schedule A, (C) off-site storage of
Software and data for recovery purposes, which data shall be retained in
accordance with Health Net’s data retention policies and Section 2.22(d)below;
(D) regular tests of backup and restore processes as appropriate; and
(E) maintenance of reserve capacity to provide for emergency situations (e.g.,
to restore damaged DASD Equipment) and normal operation. In addition,
appropriate backups will be taken prior to and after major Software upgrades or
changes, systems conversions and after significant processing periods.

 

  (ii) Maintaining a backup media library onsite at the data center for
efficient and effective recovery of certain backup data required for operations,
as set forth in the Procedures Manual. Supplier will perform tape inventory and
distribution activities and system recovery activities as needed to support
operations and in accordance with the Service Levels and in a manner designed to
minimize disruption to the End Users. Supplier shall transport media stored
onsite to the applicable production areas and shall request tapes from offsite
locations and transport such tapes to applicable production areas.

 

  (iii)

Performing regularly scheduled system backups within pre-defined backup windows
and as otherwise approved by Health

 

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Net. Supplier shall conduct backup processes and procedures so as not to
adversely impact scheduled operations.

 

  (iv) Providing recommendations to Health Net regarding performance usage,
backup and recovery considerations, such as improved levels of protection and
efficiencies.

 

  (v) With prior notification from Health Net, retrieving, and re-installing
off-site stored data in accordance with the Service Levels or, if no Service
Levels exist, as otherwise mutually agreed by the Parties. Supplier shall
coordinate for return of stored data with Health Net’s offsite storage vendor.

 

  (vi) Pursuing improvements in backup capabilities, procedures and tools,
including implementing redundancy measures where required.

 

  (vii) With respect to backups that need to be retained indefinitely pursuant
to Tables 19 and 20, below, such backups shall be made on new media (i.e., media
that has not been used before, whether for Health Net or otherwise).

 

  (b) Onsite Media Storage.

 

  (i) Retain backup media that is stored on-site in a securely stored area that
is physically and environmentally controlled.

 

  (ii) Make available, or request delivery from the offsite storage vendor for,
the most recent backup media in the event of a production issue that requires
the restoration of data.

 

  (iii) Granting access to the onsite storage media to authorized individuals
only.

 

  (iv) Labeling, logging and making available (including to Health Net
authorized personnel and third parties) all relevant backup media stored onsite.

 

  (v) Logging and monitoring backup media sent offsite.

 

  (c) Off-Site Media Storage.

 

  (i) Store external storage media, business continuity-related Documentation,
Health Net Data, and other information as required by Health Net policies and
procedures at a Health Net-designated storage location.

 

  (ii)

Execute off-site storage procedures, including logging, shipping to (while
maintaining integrity of data), receiving media from the off-site facility,
managing an inventory of off-site tapes, reporting

 

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on off-site removable data storage media activity on a periodic basis.

 

  (iii) Maintain a list (in accordance with a procedure that has been approved
by Health Net) of persons who are authorized to recall offsite storage.

 

  (iv) Comply and review compliance with Health Net’s physical specifications
and security requirements.

 

  (v) Following, maintaining, and updating procedures governing cycling/rotation
of media and media retention periods (including for auditing purposes),
including as set forth in Section 2.22(d) and Tables 20 and 21 below. For media
identified by Health Net as being required to be retained on a long-term basis,
Supplier will maintain such media in accordance with Health Net’s requirements.

 

  (d) Archiving/Data Retention. Supplier shall at all times comply with Health
Net’s data retention and archiving policies, unless otherwise approved in
writing by Health Net, including with respect to the following:

 

  (i) Supplier shall not alter, conceal, destroy or permit the destruction of
any Health Net Data or any other data, as described below, that is in its actual
or constructive care, custody, or control:

 

  (A) Health Net Data or other data that has been backed up and retained by
Health Net;

 

  (B) Health Net Data or other data that is backed up in accordance with
Section 2.22(d)(iii) below, during the retention period stated in
Section 2.22(d)(iii) below; and

 

  (C) Health Net Data or other data related to the Services that is stored on a
Supplier Personnel’s computer work station that is not backed up on Supplier’s
computer backup media (as referred to in Section 2.22(d)(i)(B)).

 

  (ii) Without limiting the foregoing, Supplier must manage the live systems and
backups in such a way that electronically stored information is not
inadvertently deleted such that it would violate Health Net’s record retention
policy, including by:

 

  (A) Preserving all email data indefinitely in the email archive system.

 

  (B) Not activating or utilizing auto-delete functions in any systems used to
provide the Services.

 

  (iii)

Tables 19 and 20 below set forth Supplier’s responsibilities with respect to
certain backups of the data center systems and network

 

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systems (both Data Network and Voice Network), respectively. In addition,
Supplier shall (A) perform desktop, workstation, and laptop backups for
employees who leave the employment of Health Net (which backups shall be
retained indefinitely) and (B) perform the following back-ups of the Voice
Network systems:

 

  (A) For Voice Network systems with integrated tape drives, perform nightly
backups and change tapes the earlier of (a) a vendor service call, or
(b) quarterly basis; and

 

  (B) for Voice Network systems without integrated tape drives, perform
quarterly backups.

Table 19. Data Center Services—Backup Schedule

Data Center Services—Backup Schedule

 

Type of Backup

   Backup Frequency    Storage Site    Retention Period

Incremental

   Daily    Off-site    14 days

Full (Backup)

   Weekly    Off-site    2 months

Full (Backup)

   Monthly    Off-site    Indefinite

Table 20. Network Services—Backup Schedule

Network Services—Backup Schedule

General

 

Incremental

   Daily    Off-site    35 days

Full (Backup)

   Weekly    Off-site    Indefinite

Full (Archive)

   Monthly    Off-site    Indefinite

 

  (e) Litigation Requests. Supplier shall provide data and reporting (in the
manner, form and format as may be requested by Health Net) to meet Health Net’s
legal requirements, including with respect to litigation requests,
investigations by Health Net’s Organization Effectiveness business unit or
Health Net’s Special Investigations Unit, other Health Net-initiated
investigations, and managers’ requests. Such data that Supplier may be asked to
provide include email data, home drive data, common drive data, or archived data
stored offsite. Supplier may, in some instances, be required to set-up a new or
use an existing non-production environment to retrieve archived data. Supplier
shall also provide Health Net with access to Health Net’s email system and email
archive system so that Health Net may download data from such systems, and
Supplier shall maintain and support an access method for allowing such
downloads, as determined by Health Net (e.g., FTP connections).

 

  2.23 IT Continuity & Disaster Recovery Services.

 

  (a)

IT continuity and disaster recovery Services are the Functions associated with
implementation, maintenance and testing of a mutually agreed-upon technology
business continuity plan and solution for the Services, including

 

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for backup and recovery for databases, Software and networks. (the “TBCP”). The
TBCP shall be a component of Health Net’s overall business continuity plan.

 

  (b) Supplier shall follow the existing TBCP in effect immediately prior to the
Effective Date. Supplier shall update the TBCP pursuant to Section 2.23(c), and
otherwise as necessary and appropriate to remain current with the environments
covered by the plan.

 

  (c) Supplier will comply with Health Net’s disaster recovery policies and
business requirements (and changes thereto), including any applicable regulatory
requirements, to the extent such plans, policies, requirements and regulations
(and changes thereto) apply to the Services and have been disclosed in writing
or otherwise made available to Supplier.

 

  (d) Supplier shall review and revise, as necessary, the TBCP in the following
manner:

 

  (i) Within the first ninety (90) days after the Effective Date, Supplier and
Health Net shall review Health Net’s existing TBCP. Based upon this joint
review, Supplier will propose updates and revisions to the existing TBCP, for
Health Net’s review and approval, to reflect the Services provided and to
respond appropriately to new Health Net requirements.

 

  (ii) Within thirty (30) days after receiving Health Net’s comments, provide
Health Net for Health Net’s review, comment and approval, a revised draft of the
TBCP, based on Health Net’s review and Supplier’s proposed changes approved by
Health Net. Supplier shall incorporate any comments or suggestions by Health Net
into the revised draft TBCP, expressly identifying where any of Health Net’s
comments or suggestions are likely to impact Supplier’s ability to meet the
required Business Continuity Restoration Time and Recovery Point Objective.

 

  (iii) Within thirty (30) days after receiving Health Net’s comments on the
revised draft provided by Supplier pursuant to Section 2.23(d)(ii) above,
provide Health Net for Health Net’s approval the final revised TBCP. The final
revised TBCP shall not be implemented until it has been approved by Health Net.

 

  (iv) With cooperation and approval from Health Net, review and update, if
necessary, the TBCP on an annual basis or as otherwise warranted by business or
technical changes (or both) to verify compatibility with Health Net’s overall
business continuity plan. Supplier will receive business direction and
requirements from Health Net and must receive authorization from Health Net to
make significant changes to the strategic and/or tactical direction of the TBCP.

 

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  (e) The TBCP shall be maintained to enhance the effectiveness of Health Net’s
existing technology business continuity/disaster recovery capabilities,
including being used for business contingency protection in order for Health Net
to continue to meet promised and contractually required Service Levels in the
event of the full or partial loss of Health Net’s primary computing location.
Among other things, the TBCP shall:

 

  (i) Identify a disaster recovery solution and procedures that are in
accordance with standards and procedures agreed upon by Supplier and Health Net,
which standards and procedures will provide fully integrated cross-functional
recovery, as specified in the Procedures Manual and which will be no less
stringent than the standards and procedures used at well-managed operations
providing functions similar to the Services.

 

  (ii) List the agreed-upon time criteria for restoring Health Net’s operating
environment and recovering those resources necessary to permit Health Net to
recover Applications Software within the timeframes designated by Health Net. As
of the Effective Date, Supplier shall meet the following Business Continuity
Restoration Times and Business Recovery Point Objective:

 

  (A)

“Business Continuity Restoration Time” or “RTO” means (1) seventy-two (72) hours
for that Software identified in the TBCP as “Critical Software” and using
Commercially Reasonable Efforts, one hundred and sixty eight (168) hours for all
other Software. Business Continuity Restoration Time shall be measured as the
elapsed time between (i) the moment Supplier is aware or reasonably should have
been aware of the initiation of a contingency or recovery test of any of the
Services or of the declaration of an actual disaster with respect to any of the
Equipment, Software, Services or data related to the Services, and (ii) the
moment that the affected Equipment, Software, Services and data related to the
Services are restored to normal operations in their business continuity recovery
environments, and are available for use in accordance with the applicable
business continuity plan(s) and specifications, with the corresponding Business
Continuity Recovery Point Objective not exceeded; provided, however, that with
respect to an actual declared disaster, if the affected Equipment, Software,
Services or data related to the Services are so restored and Available for Use,
but a stable recovery has not been achieved by Supplier for reasons outside of
Supplier’s control and such Equipment, Software, Services or data thereafter
subsequently fails to be Available for Use in accordance with the TBCP and
specifications as a result of Supplier’s failure to achieve a stable recovery
state, then the calculation of the Business Continuity Restoration Time will
also include, in addition to the foregoing, the time between the onset of such
subsequent failure and the moment that the affected Equipment, Software,
Services and data related to the Service(s) are again restored to

 

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normal operations, and are Available for Use in accordance with the applicable
business continuity recovery plan(s) and specifications with the corresponding
Business Continuity Recovery Point Objective not exceeded.

 

  (B) “Business Continuity Recovery Point Objective” or “RPO” means the elapsed
time, for each particular data, between (a) the initiation of a contingency or
recovery test of any of the Services or of the declaration of an actual disaster
with respect to any of the Services, and (b) the moment that such data was or
should have been backed-up, provided that any such delay in backup was not
caused by Health Net, during a regularly scheduled backup of such data (e.g., if
a scheduled backup was supposed to occur 18 hours prior to the occurrence of a
disaster, then the RPO for the applicable data would be 18 hours) provided that
such backup has been sent, or should have been sent in accordance with Health
Net’s requirements, to the Health Net designated offsite storage facility.

 

  (iii) List the agreed-upon time criteria for transporting storage media from
off-site storage facilities to the applicable disaster recovery facilities.

 

  (iv) Provide for the recovery of information technology processing
capabilities within the time frames designated by Health Net.

 

  (v) Contain a brief description of processes and procedures used to recover
the Services, and associated time frames for the recovery of such Services,
including a prioritized listing of Applications, subject to Health Net’s review
and approval;

 

  (vi) Identify a listing of the Equipment operated by Supplier and Software
comprising the Configuration by the recovery timeframes designated by Health
Net;

 

  (vii) Describe Supplier’s and Health Net respective recovery responsibilities;

 

  (viii) Set forth contact listings of Health Net and Key Supplier Personnel;

 

  (ix) Identify recovery teams for each Party;

 

  (x) Describe recovery scenarios;

 

  (xi) Contain criteria for disaster declaration, recovery and testing and
maintain a list of Health Net personnel who are authorized by Health Net to
declare a disaster;

 

  (xii) Describe backup process and components;

 

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  (xiii) Identify the hot sites designated by Supplier for business continuity
functions and the location for off-site storage of the tape backups;

 

  (xiv) Contain notification procedures;

 

  (xv) Address recovery information, procedures and schedules;

 

  (xvi) Address periodic reporting, which shall at a minimum include testing
results. Supplier shall provide access to an on-line system that lists the
Applications and the corresponding recovery timeframes designated by Health Net;

 

  (xvii) Contain a plan for the transition back from the disaster recovery site
to Supplier Facilities of the affected services and restoration of Services at
the affected site upon cessation of the disaster;

 

  (xviii) Address testing results and any required corrective action plans; and

 

  (xix) Contain procedures for maintaining the TBCP. Health Net will, from time
to time, review and modify the policies and business requirements and such
modifications will be implemented by Supplier in accordance with the Change
Control Process. Health Net may from time to time request, and Supplier shall
provide to Health Net upon such request, copies of Supplier’s then-current
disaster recovery and business continuity plans, procedures and capabilities and
the results of any tests thereof.

 

  (f) In the event of a disaster, Supplier shall provide technology business
continuity Functions in accordance with the TBCP. Supplier’s Functions shall
include the following:

 

  (i) Declaring a disaster upon request from Health Net, or upon approval by
Health Net. If it is not feasible for Supplier to obtain Health Net’s approval
prior to declaring a disaster, and Supplier reasonably and in good-faith
believes that a disaster has occurred, Supplier shall promptly notify Health Net
of a declared disaster.

 

  (ii) Providing a single point-of-contact for technology business continuity
related communications and activities.

 

  (iii) Maintaining communications with Health Net as to the status of the
disaster and the progress of the restoration process.

 

  (iv) Assuming responsibility for the data processing operating environments
and data network facilities at the disaster recovery facilities, including the
following:

 

  (A)

Taking immediate action to prepare the recovery center for use and providing the
resources (including processing and network

 

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resources) necessary to support Applications. In the event that a disaster
renders Supplier incapable of providing the Services, Supplier will move its
operations to the designated Recovery Center and provide the Services to Health
Net within the time frames assigned by Health Net for each Application and
documented in the TBCP.

 

  (B) Delivering the data, Systems Software and Application Software archived in
off-site storage to the Recovery Center designated in the TBCP.

 

  (C) Rerouting the affected data communications circuits to the Recovery
Center.

 

  (D) In the event of a declared disaster with respect to a data center,
Supplier will recover the operating environment platform in the Recovery Center
in accordance with the Business Restoration Time Objective and the Recovery Time
Objective and other information provided in the TBCP. As of the Effective Date
(and unless otherwise agreed upon by the Parties pursuant to the revised TBCP),
in the event that a disaster occurs in any data center, all workloads for
customers affected or not affected by the disaster will be acquiesced as
necessary and in accordance with the TBCP, and other disrupted workloads would
be restored.

 

  (E) Recovering the environments and resources necessary for Health Net to
recover Applications in accordance with the TBCP and within the time frame
designated by Health Net for such Applications.

 

  (F) Operating the Applications on the Configuration at the Recovery Center.

 

  (G) Furnishing all supplies and storage media (excluding supplies for which
Health Net is responsible under the Agreement (e.g., special forms)).

 

  (H) Paying all costs associated with off-site data storage, including
transportation to and from the storage facility and the Recovery Center.

 

  (I) Providing all required Data Network connectivity to the Recovery Center.

 

  (J) Paying all travel and living expenses incurred by Supplier Personnel in
the performance of Supplier’s responsibilities described in this Section 2.23.

 

  (K) Upon cessation of the disaster, promptly implement the plan to restore the
affected Services at the affected sites.

 

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  (g) Supplier shall perform IT continuity, availability and disaster recovery
Services, including those Functions listed in the roles and responsibilities
table below, except for those Functions that are expressly identified as
retained Health Net responsibilities in the roles and responsibilities table
below.

Table 21. IT Continuity, Availability and Disaster Recovery Roles and
Responsibilities

 

Disaster Recovery Roles and Responsibilities

   Supplier    Health Net

1.      Define Health Net disaster recovery Strategy, requirements, scenarios
and establish RTO, RPOs and resiliency/redundancy requirements for IT
Infrastructure and systems

      X

2.      Assist in the planning and analysis of data and voice business
continuity

   X   

3.      As requested by Health Net, assist Health Net in other business
continuity and emergency management activities.

   X   

4.      Perform disaster recovery planning, and documentation required by Health
Net’s customers.

   X   

5.      Coordinate disaster recovery testing (or, in the event of a disaster,
disaster recovery execution) for Health Net customers and business partners,
including by coordinating with third parties as necessary.

   X   

6.      Develop detailed disaster recovery plan to achieve DR requirements

   X   

7.      Update DR plans as needed to reflect changes in Health Net environment

   X   

8.      Review & Approve disaster recovery plan

      X

9.      Establish DR test requirements

      X

10.    Interface Supplier’s disaster recovery and business continuity plans,
procedures and capabilities with, and provide support and assistance to Health
Net in connection with Health Net’s testing of, Health Net’s disaster recovery
plans, processes and procedures.

   X   

 

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Disaster Recovery Roles and Responsibilities

   Supplier    Health Net

11.    Perform scheduled DR tests in accordance with the following:

 

•        Performing testing (including interim and full tests) in accordance
with the TBCP (including using “real data files” during such tests) and as
otherwise requested by Health Net.

 

•        Performing testing with respect to each Supplier Facility and other
facilities related to or affecting the Services

 

•        Scheduling testing at dates and times initially agreed upon by the
Parties as part of the testing process.

 

•        Performing the test at the business Recovery Center.

 

•        Permitting Health Net to observe all such tests or parts of such tests

 

•        Providing Health Net with a written report of the test results and
providing Health Net with proposed TBCP modifications

 

•        Performing Problem resolution and retesting of unsuccessful Services
test components in a timely manner

 

•        Coordinating involvement of users as needed for DR testing

 

•        Assisting Health Net in performing disaster recovery testing one time
per year that will enable Health Net to test compatibility of their applications
with the Recovery Center environment.

 

•        Provide Online Status Communication Tool during Test

 

•        Provide Toll Free Status Line

   X   

12.    Review & approve disaster recovery testing results

      X

13.    Adjust the disaster recovery solution as necessary to accommodate growth
in Health Net’s business volumes (including per Health Net’s projected yearly
growth), changes in Health Net’s operating environments, Application Software
enhancements, changed processing locations, or new functions requested.

   X   

14.    Perform annual re-engineering of backups to include critical Software to
be tested

   X   

15.    Plan for disaster recovery backup requirements in planned Equipment
purchases.

   X   

16.    Identify opportunities (if any) for improvement and efficiencies in
disaster recovery functions.

   X   

17.    Review and approve opportunities for improvement and efficiencies in
disaster recovery functions.

      X

18.    Support testing requirements Health Net Federal Services as set forth in
Exhibit A-6.

   X   

19.    Identify the software that is critical Software, as such critical
Software may change from time to time over the Term.

      X

20.    Recommend disaster recovery goals and initiatives for following year.

   X   

21.    Review and approve disaster recovery goals and initiatives

      X

22.    Provide a Supplier Personnel to lead year round initiative discussions,
decisions, and status calls related to disaster recovery.

   X   

 

  (h) Without limiting the generality of Supplier’s obligations stated elsewhere
in this Section 2.23, Supplier shall perform the disaster recovery test planning
Functions listed in the roles and responsibilities table below, except for those
Functions that are expressly identified as retained Health Net responsibilities
in the roles and responsibilities table below:

 

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Disaster Recovery Roles and Responsibilities

   Supplier    Health Net

23.    Determine the scope of the test and the applications to be restored.

      X

24.    Identify primary and secondary goals of the test and define the criteria
for a successful test.

      X

25.    Conduct plan reviews with recovery teams and updating or identify
additional plan materials needed to complete their plans.

   X   

26.    Update disaster recovery plans to include new requirements and materials.

   X   

27.    Review and approve DR plans.

      X

28.    Develop application / End User master plan and assign responsibilities.
(Includes acquiring and scheduling the users who will be doing the test)

   X   

29.    Conduct Joint Steering Committee and test team meetings.

   X   

30.    Participate in Joint Steering Committee and test team meetings.

      X

31.    Verify that each application has developed appropriate testing scripts.

      X

32.    Communicate to Health Net executive management status of test preparation
activities.

   X   

 

  (i) In addition to, and without limiting in any way, Supplier’s obligations
set forth in this Section 2.23, Supplier shall also provide the following as
part of the IT continuity and disaster recovery Services:

 

  (i) A resilience program assessment including:

 

  (A) A review of current and expected future recovery time and recovery point
requirements;

 

  (B) Review planned changes to the Health Net production environment as a
result of outsourcing to Supplier’s Boulder facility;

 

  (C) RTO/RPO optimization workshops to define opportunities for short term and
long term opportunities to improve RTO / RPO capabilities;

 

  (D) Observation and review of results of the next scheduled DR test; and

 

  (E) Analysis and documentation of findings and recommendations.

 

  (ii)

Validate that all backups required to support “essential systems / applications”
(as identified by Health Net) and “supporting systems / application” are being
backed up and moved offsite under the same requirements as those systems /
applications that have been determined as being “critical”. For any “essential
systems / applications and supporting systems / application whose backups do not
meet this standard, Supplier will develop and implement a solution to comply
with such standard within sixty

 

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(60) days. Supplier will also verify that all interfaces required for both
“critical” and “essential” systems / applications have been accounted for and
recovered as necessary.

 

  (iii) Without limiting Supplier’s obligation to provide certain operating
system restore services under one or more of the Existing DR Contracts,

 

  (A) perform a comprehensive review and assessment Health Net’s operating
system environment to determine:

 

  •  

which platforms would benefit from storing their operating system images at the
recovery site,

 

  •  

the number of operating system images that should be stored at the recovery
site,

 

  •  

the frequency with which images are modified,

 

  •  

the size of the operating system images, in order to determine the appropriate
capacity at the recovery site to store them,

 

  •  

the amount and type of bandwidth required to transfer the images to the recovery
site.

 

  (B) Design a solution for Health Net designed to:

 

  •  

transfer Health Net’s operating system images to the recovery site,

 

  •  

store Health Net’s operating system images on disk at the recovery site,

 

  •  

allow Supplier to perform the restore of the OS images from disk onto the
contracted equipment following configuration at time of recovery, and

 

  •  

reduce RTO for the operating system images by the time needed to receive and
unload OS images on tape.

 

  (C) At Health Net’s request, and subject to the Change Control Process,
Supplier shall implement and maintain such operating system restore solution. To
the extent such implementation can be performed within the bandwidth of the
Supplier Personnel then existing on Health Net’s account, there shall be no
additional charges for such implementation.

 

  (j)

In addition to, and without limiting in any way, Supplier’s obligations set
forth in this Section 2.23, Supplier shall continue to provide to Health Net
those disaster recovery services that Supplier currently provides as of the

 

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Effective Date under existing disaster recovery contracts, which are identified
on Exhibit A-5 (Disaster Recovery Contracts) (the “Existing DR Contracts”).
Supplier shall obtain Health Net’s approval prior to modifying any of the
contracts identified in Exhibit A-5

 

  2.24 Environment & Facilities Support.

 

  (a) Environment and facilities support Services means those Functions
associated with maintaining environmental requirements at the operations
locations. Supplier shall perform the environment and facilities support
Services, including those Functions listed in the roles and responsibilities
table attached as Exhibit A-13, except for those Functions that are expressly
identified as retained Health Net responsibilities in the roles and
responsibilities table attached as Exhibit A-13.

 

  (b) In addition, Supplier shall:

 

  (i) Provide Health Net environment and facilities support by identifying
network equipment location requirements.

 

  (ii) For the networking environment (e.g., Network Equipment locations)

 

  (A) Approve environment and facilities Support requirements and procedures;

 

  (B) Develop and document procedures for environment and facilities support;

 

  (C) Approve improvement plans for Health Net facilities; and

 

  (D) Implement or coordinate the implementation of all approved upgrades and
installations.

 

  2.25 Procurement Services.

 

  (a) General. If requested by Health Net (via automated requests (e.g.,
submitted using Lotus Notes-based OrderNow Request systems)), Supplier shall act
as a buying agent for Health Net in the purchase of Equipment and Software or
other items available for purchase by Health Net End Users via the Health Net
product catalogues (collectively, the “Purchasable Items”). In performing such
Services, Supplier shall:

 

  (i) Provide order placement, order tracking, goods receipt and distribution
Services for the Purchasable Items, in accordance with the Procedures Manual,
the Service Levels and as otherwise required under this Schedule A.

 

  (ii) Implement all required order tracking processes and procedures within the
time frames set out in the Transition Plan to enable the Services to be
delivered.

 

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  (iii) Provide updates to the order request and procurement tracking systems
with all order-related activity.

 

  (iv) Provide reporting on procurement Services, including proactive status
reporting for each order as it goes through the process, and periodic summary
metric reporting on the procurement Services (e.g., quantities of particular
Purchasable Items purchased per month).

 

  (v) Receive order requests from Health Net End Users; verify the End Users
have the appropriate authorizations (as determined by Health Net and provided to
Supplier) to purchase the items in their order requests prior to placing an
order; place the order with the appropriate vendor; and answer order-related
questions received by Health Net End Users.

 

  (vi) Provide Health Net End Users with access to the order placement and
tracking systems for the purpose of checking the status of orders.

 

  (vii) Comply with all Health Net order placement requirements, including using
Health Net purchasing agreements if use of such purchasing agreements would
result in a cheaper purchase price for a particular Purchasable Item.

 

  (viii) Interface with Health Net’s strategic sourcing group for vendor pricing
issues and other related matters as necessary.

 

  (ix) Follow through on delivery of all orders, including confirming delivery
of orders or, when delivery is not made as agreed, resolve any problems
preventing timely delivery of such orders.

 

  (x) Populate and update as necessary the purchasing system and asset
management system with Health Net-designated purchasing information.

 

  (xi) Recommend to Health Net Purchasable Items that could be added to the
Health Net product catalogues (including internal Health Net product catalogues
and third party product catalogues, as applicable); update such product
catalogues as requested by Health Net; notify Health Net (including Health Net
Federal Services) of updates to the product catalogues.

 

  (b) Order Changes. If Health Net withdraws, cancels, or modifies a purchase
order for a Purchasable Item, Supplier shall facilitate any required product
returns and pass through to Health Net any associated third party termination,
cancellation or return charges. If Supplier should receive a refund, credit or
other rebate, Supplier shall promptly notify Health Net of such refund, credit
or rebate and shall promptly pay the full amount of such refund, credit or
rebate, as the case may be, to Health Net.

 

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  (c) Receiving Purchasable Items.

 

  (i) Supplier shall coordinate and manage the receipt of Purchasable Items at
Health Net Facilities and at Supplier’s warehouse facilities, including
Purchasable Items from Health Net vendors and third party providers.

 

  (ii) Supplier shall be responsible for all delivery confirmation and document
receipt and verification activities at a Health Net Facility or at Supplier’s
warehouse facility, including validation of proper type and quantity of
Equipment received.

 

  (iii) Supplier shall be equipped to handle both large and single unit
deliveries.

 

  (iv) Supplier shall be responsible for providing to Health Net order tracking
status information.

 

  (v) Supplier must comply with Health Net on-site delivery schedules and
processes as directed and approved by Health Net.

 

  (vi) Upon delivery of Purchasable Items at a Health Net Facility or Supplier’s
warehouse facility, Supplier shall be responsible for:

 

  (A) verifying delivery contents, recording all incoming boxes, and reporting
any discrepancies to Health Net;

 

  (B) visually checking the condition of incoming boxes for damage and reporting
all discrepancies to Health Net;

 

  (C) de-bundling Purchasable Items when multiple orders are received as part of
a single shipment;

 

  (D) handling all incident resolution with the carrier of the Equipment to
resolve discrepancies in delivery. If a problem is not resolved within a
reasonably quick timeframe, Supplier shall notify Health Net of such problem;

 

  (E) managing the return of damaged Purchasable Items to the supplier;

 

  (F) removing all skids and packaging from the loading area and placing
Purchasable Items in a designated area;

 

  (G) obtaining signoff of the waybill from the authorized Health Net personnel
or such personnel’s designee;

 

  (H) upon request, providing Health Net with status information on all goods
received;

 

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  (I) tagging all received Purchasable Items in accordance with Health Net’s
tagging requirements; and

 

  (J) updating the asset management system in accordance with this Schedule A.

 

  (d) Distribution of Purchasable Items.

 

  (i) Supplier will bundle Purchasable Items by order prior to distribution to
the Health Net End User (e.g., in the event a vendor ships a laptop separate
from its peripherals, Supplier shall bundle them all together prior to
distribution to the Health Net End User).

 

  (ii) Supplier will coordinate the transportation and distribution of
Purchasable Items to the appropriate Health Net Facility or other location as
needed by End Users.

 

  (iii) Supplier’s desktop technician will (i) for Campus and Metro Health Net
Facilities (as designated in Schedule F), receive product, complete delivery,
and complete installation for the End User, and (ii) for Remote Health Net
Facilities (as designated in Schedule F), coordinate the delivery of the
Purchasable Item directly to the End User and assist the End User remotely, as
needed, to complete the installation.

 

  2.26 De-Installation, Disposal, and Repurposement Services.

 

  (a) De-installation of Equipment.

 

  (i) Supplier shall provide de-installation Services for the Equipment in
accordance with the Service Levels and as otherwise required under this Schedule
A.

 

  (ii) Supplier shall be responsible for the de-installation and removal of all
Equipment that Health Net no longer requires to a designated secure location at
the Health Net Facility, a Supplier warehouse facility, a third party vendor, or
to the leasing company (as may be applicable or requested by Health Net).

 

  (iii) Supplier shall dispose of Equipment in the manner requested by Health
Net, which may include disposal, in accordance with Section 2.6(b) of this
Schedule A or equipment “re-purposing”. Supplier shall perform all Equipment
re-purposing in accordance with Section 2.26(d)of this Schedule A.

 

  (iv) Supplier shall remove non-working and obsolete Equipment in compliance
with the Agreement.

 

  (v) Supplier shall be responsible for all processes and procedures for the
removal of Equipment.

 

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  (vi) Supplier shall provide for a complete inventory of all de-installed
Equipment by ensuring that an asset inventory scan or manual inventory update is
executed before disconnecting the applicable unit to update the asset management
system with all applicable Equipment and Software information.

 

  (vii) Upon removal of the Equipment, Supplier shall update the asset
management system to maintain up-to-date asset management information and
documentation.

 

  (viii) Supplier shall provide an asset management report to Health Net as
described in Schedule W (Reports) identifying the Equipment that has been
removed and its configuration.

 

  (ix) Supplier shall be responsible for compiling a complete inventory of
Software installed on the Equipment and confirming the removal of that Software.

 

  (x) Supplier shall be responsible for performing all removal activities as
follows:

 

  (A) disconnection and removal of the Equipment;

 

  (B) removal of any and all Health Net identifying tags labels or other
identifying information including logos from the equipment; and

 

  (C) individually boxing and labeling Equipment, as required.

 

  (xi) Supplier shall track all Equipment that has been removed by serial
number, tag number and cost center and update such information in the asset
management system.

 

  (xii) Supplier shall provide reports on the disposition of all de-installed
Equipment through the asset management system, which shall contain all of the
required Equipment information including manufacturer, model, serial,
description and demographic data.

 

  (xiii) Upon removal of Equipment, Supplier shall notify Health Net and
applicable third parties, using a mutually agreed to process, to disable any
ports so that network port inventory and chargeback can be adjusted accordingly.

 

  (xiv) Supplier shall identify to Health Net, and obtain Health Net’s approval
of, the processes Supplier will use to de-install and remove the Equipment.

 

  (xv) Within three (3) Business Days of completing the Equipment
de-installation process, Supplier shall update all required fields in the asset
management system, including:

 

  (A) manufacturer;

 

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  (B) device;

 

  (C) model;

 

  (D) serial number;

 

  (E) type of equipment;

 

  (F) location; and

 

  (G) method and means of disposal.

 

  (b) Means of Disposal.

 

  (i) For Health Net Owned Equipment, upon Health Net’s request, Supplier shall
perform and coordinate Equipment resale and disposal activities for Equipment.
Supplier shall perform such Services in accordance with Health Net’s corporate
technology policy and procedures for de-installation and recycling services,
including working with the End User to complete the necessary data submission
required by the process. In coordinating such activities, Supplier shall comply
with the following:

 

  (A) Supplier shall evaluate each item of de-installed Equipment to determine
whether the hard drive of such equipment is damaged.

 

  (B) If the hard drive of an item of Equipment is damaged, within ten
(10) Business Days of receipt at Supplier’s warehouse staging facilities,
Supplier shall drive a nail through the hard drive.

 

  (C) After driving a nail through the hard drive, Supplier shall as directed by
Health Net:

 

  •  

recycle the Equipment;

 

  •  

install a new hard drive and resell the Equipment; or

 

  •  

resell or recycle the remaining components of the Equipment.

 

  (D) Supplier shall provide Health Net with inventory lists and records
indicating the means of disposition of the Equipment after the evaluation
process. In no event shall Supplier deliver for donation or resell Equipment
with a defective hard drive or media and storage devices.

 

  (E) Supplier shall not destroy, recycle, resell, or otherwise dispose of
Equipment until it has performed the data scrubbing Services required under
Section 2.6(b) on such Equipment.

 

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  (F) Supplier shall not remove, delete or erase any Equipment manufacturer
labels, logos or serial numbers.

 

  (G) Supplier shall return Health Net Leased Equipment to the lessor in
accordance with the applicable lease agreement.

 

  (c) Health Net Assets.

 

  (i) With respect to Health Net assets coming off of a lease for which Health
Net bears financial responsibility (if any), Supplier shall take such steps as
are necessary to return such leased Health Net assets to lessors in accordance
with commercially reasonable lessor guidelines. Such steps shall include
establishing, operating and maintaining a “return room” which will perform bench
testing, deletion and obliteration of information contained on fixed storage
media in accordance with the process described in Section 2.6(b) , inventory of
returned machines to confirm that no components are missing (and adding in any
components that are missing), packaging and shipping.

 

  (ii) With respect to Health Net assets owned by Health Net that are
decommissioned or removed and not re-used, Supplier shall relocate such assets
to a secure area as designated by Health Net and thereafter store, ship or
dispose of such assets as designated by Health Net.

 

  (d) Repurposement.

 

  (i) General.

 

  (A) At Health Net’s request, Supplier shall be responsible for the
re-purposing of Equipment for use by Health Net or for use by Supplier in
providing the Services to Health Net, in either case in accordance with this
Section 2.26(d).

 

  (B) Supplier shall be responsible for all processes associated with
re-purposing of Equipment in accordance with the Procedures Manual.

 

  (C) For purposes of re-purposing Equipment, Supplier shall follow the
established system preparation, configuration and installation processes as
outlined in this Schedule A and in the Procedures Manual.

 

  (D) Supplier shall provide an update to the asset management system will
changes or modifications to Equipment, if any, as a result of re-purposing
activities.

 

  (ii) Re-purpose Requirements.

 

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  (A) Supplier’s Equipment re-purposing process shall be in place at the
conclusion of the Transition period.

 

  (B) Supplier shall track Equipment in accordance with the asset management
provisions in Section 4.2 of this Schedule A (Services), provide the reports
listed in Schedule W, and schedule the replacement of Equipment in accordance
with the Section 2.21 of this Schedule A, or as otherwise agreed by the Parties.

 

  (C) Supplier shall follow the established system preparation, configuration
and installation processes as outlined in this Schedule A and in the Procedures
Manual for the replacement of Equipment.

 

3. DATA CENTER SERVICES

 

  (a) “Data Center Services” means all life cycle Functions associated with the
provision of centralized computing Services to Health Net. Data Center Services
include (i) those Functions described in this Section 3, and (ii) the O&M
Services and the Enterprise Security Management Services, each as they apply to
the Functions, Equipment, Software, process, or other activities described in
this Section 3.

 

  (b) Supplier shall provide Data Center Services for all of Health Net’s
current and future IT platforms and systems unless directed otherwise by Health
Net, including mainframe systems ,zSeries, multiple Unix, Wintel and Linux
systems supporting Health Net’s applications and databases, centralized database
services, Internet services, vertical business Applications, ERP processing and
data warehouse Applications; and additional Application and database mainframe
systems and servers, such as AS400- zSeries and iSeries, pSeries, DB2, VMS,
Unix, Windows 2000 and Windows 2003 Server.

 

  3.1 Overall Responsibilities.

 

  (a) Supplier shall be responsible for performing the following general Data
Center Services:

 

  (i) Manage and support proprietary systems that may be deployed to support the
core business systems and provide Internet/extranet/intranet services, as well
as the various Health Net infrastructure technical support Software tools.

 

  (ii) Implement and maintain event and workload management processes across all
new and legacy platforms, including though not limited to, Supplier mainframe;
Supplier midrange AS/400s iSeries, zSeries,; HP and Sun Unix servers; and
Intel-based servers.

 

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  (iii) Provide support for all System Software computer-processing Services
(including Middleware, messaging, collaborative computing platforms, Internet
and Intranet).

 

  (iv) Provide data center network operations support (including systems
monitoring; Problem diagnostics, troubleshooting, resolution and escalation;
security management; and capacity planning/analysis).

 

  (v) Provide Application computer processing services, including new enterprise
Applications currently being deployed.

 

  (vi) Perform data backup and restoration services, including Remote sites with
servers/systems requiring data backup, restoration, and disaster recovery
services in accordance with Health Net established policies. Routine system-wide
backup procedures are an integral part of the restoration process. Supplier
shall implement and maintain a backup/restoration capability based on Health Net
requirements in accordance with Section 2.22, including:

 

  (A) Daily Incremental file and print system backups,

 

  (B) Daily iSeries Incremental Data Backups,

 

  (C) Daily UNIX System and Data Backups,

 

  (D) Full File and Print System Backups,

 

  (E) Full iSeries System and Data backups,

 

  (F) Full UNIX System and Data Backups

 

  (vii) Monitor the availability and performance of the Equipment and Software
(including Health Net’s internet-based Applications), and automatically generate
trouble tickets.

 

  (viii) Provide reasonable support for Application initiatives, including, but
not limited to the In-Flight Projects

 

  (ix)

Provide logical access to Health Net-authorized third party vendors to
production systems as needed by such Health Net-authorized third party vendors
and in accordance with the Procedures Manual; provided that if a Health
Net-authorized third party vendor requires root authority level access, Supplier
may either grant such Health Net-authorized third party vendor the necessary
root authority level access or Supplier shall perform the activities that would
otherwise be performed by the Health Net authorized third party vendor if
Supplier had granted such Health Net authorized third party vendor the necessary
root authority

 

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level access. Supplier shall maintain an audit trail of access to the production
system.

 

  3.2 Planning & Analysis.

Supplier is responsible for performing those planning and analysis Services
described below that are identified as Supplier responsibilities:

Table 22. Planning and Analysis Roles and Responsibilities

 

Planning and Analysis Roles and Responsibilities

  

Supplier

  

Health Net

1.      Conduct infrastructure planning and analysis for new Equipment and
Software

   X   

2.      Perform technical planning for capacity and performance.

   X   

3.      Provide management reports for utilization trend analysis.

   X   

4.      Define Health Net Data backup and retention policies and requirements.

      X

5.      Implement and maintain approved backup and retention policies.

   X   

 

  3.3 Engineering/Development.

Supplier will recommend partitioned resources or server domains for Software
performance and processing.

 

  3.4 Integration and Testing.

 

  (a) Supplier will perform integration and testing Services to verify all
individual data center infrastructure components that are configured with or
added to the computing environment work together properly as a single system
performing all of the intended Functions, including by:

 

  (i) Managing the data center integration test environment; and

 

  (ii) Assessing and communicating the overall impact and potential risk to
existing Software prior to implementing changes.

 

  (b) Supplier will maintain Software release matrix across development, QA, and
production systems for operating system, database, and Software releases and
patches.

 

  3.5 Implementation and Migration.

Supplier will perform implementation and migration Services associated with the
installation and migration of new and upgraded Equipment and Software,
including:

 

  (a) Performing upgrades as a result of new and enhanced Software and
architectures;

 

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  (b) Installing and upgrading server Software;

 

  (c) Installing and upgrading Middleware and server utilities;

 

  (d) Performing data migration from existing systems to new systems, by either
electronic or manual methods;

 

  (e) Installing and upgrading Systems Software; and

 

  (f) Install infrastructure as required (e.g., servers and storage devices).

 

  3.6 Operations and Administration.

 

  (a) Supplier will perform the following operations and administration
Services:

 

  (i) Data center operations activities, including:

 

  (A) Operating consoles for centralized and remote computer processing unit
(CPU) processing centers;

 

  (B) Monitoring, troubleshooting, repairing and escalating Incidents and
Problems for consoles within the Health Net communications network;

 

  (C) Implementing preventative measures for proactive monitoring and
self-healing capabilities to limit outages that impact service delivery;

 

  (D) Monitoring CPU processing for batch and online computing;

 

  (E) Administering data storage (e.g., RAID array, SAN, NAS, tape, optical,
etc.);

 

  (F) Performing database monitoring and administration;

 

  (G) Performing data backup and recovery;

 

  (H) Planning for and managing disaster recovery;

 

  (I) Managing logical print output;

 

  (J) Creating volume and individual CD ROM/DVD;

 

  (K) Sending out media to offsite storage locations as required and using
trackable methods (e.g., UPS);

 

  (L) Processing inputs for activities such as loading third-party tape and
receipt and/or transmission of batch electronic files;

 

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  (M) Managing intra company file transfers and/or other data movement;

 

  (N) Managing Internet/intranet/extranet Web hosting for Internet Applications
and electronic commerce, as well as Health Net partner connectivity;

 

  (O) Managing quality control for reprocessing activities, such as batch
reruns; and

 

  (P) Performing job scheduling, job execution, reporting and resolution.

 

  (ii) Data center administration activities, including:

 

  (A) Managing user accounts, disk space quotas and access control (OS, mail,
database, Middleware, LDAP, file systems, disk space, etc.)

 

  (B) Administering security, spyware prevention and Virus prevention;

 

  (C) Asset/configuration management including Software licenses; and

 

  (D) Managing physical and logical installs, moves, adds and changes regardless
of number of users, instances and systems.

 

  (b) Supplier is also responsible for performing those Functions described
below that are identified as Supplier responsibility:

Table 23. Operations and Administration Roles and Responsibilities

 

Operations and Administration Roles and Responsibilities

  

Supplier

  

Health Net

1.      Identify, track, and resolve Incidents and Problems including: Incidents
and Problems related to Equipment, Software, data center Facilities, Network
operations, and nightly batch processes.

   X   

2.      Support the resolution of Software-related Incidents and Problems

   X   

3.      Escalate unresolved Incidents and Problems identified by Supplier to
appropriate Health Net personnel in accordance with established procedures.

   X   

4.      Coordinate the resolution of Software-related Incidents and Problems
with external vendors.

   X   

5.      Maintain a tape library, and tape management system.

   X   

6.      Implement a solution to perform encryption for all tapes created in the
TSM Environment in accordance with the Transformation Plan, and perform
encryptions in accordance with such solution. The “TSM Environment” means the
environment comprising the following platforms: UNIX, VMS, Wintel, iSeries, and
zSeries.

   X   

 

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Operations and Administration Roles and Responsibilities

  

Supplier

  

Health Net

7.      Monitor the printing performance and take remedial action where required
to meet printing performance objectives, including management and control of
print queues, queue capacity and print request prioritization;

   X   

8.      Document all change management tasks in sufficient detail to verify
whether the change management processes were followed, and make such
Documentation available to Health Net.

   X   

9.      Recommend batch scheduling requirements.

   X   

10.    Prepare batch jobs for execution.

   X   

11.    Execute batch jobs on appropriate servers

   X   

12.    Implement changes to production batch job scheduling per Health Net’s
approved schedule for temporary changes to a production scheduler job, including
temporary schedule modification; setup or modification of a job scheduler
definition and dependencies or one time schedule change for existing scheduled
jobs.

   X   

13.    Schedule and execute ad hoc Health Net batch requests as necessary.

   X   

14.    Define job scheduling requirements, interdependencies, Health Net
contacts, and rerun requirements for all production jobs.

      X

15.    Maintain database of job scheduling, contact, rerun and
interdependencies.

   X   

16.    Prepare job run parameters.

   X   

17.    Execute production batch jobs on appropriate servers as defined by Health
Net schedules.

   X   

18.    Validate job completion per agreed to processes.

   X   

19.    Notify the Health Net of job completion results.

   X   

20.    Resolve ABENDS or interruptions, including those caused by conditions
external to production programs, such as disk or tape Problems. Execute re-runs
according to existing and/or Supplier –developed (and Health Net approve)
operational procedures and restart jobs according to existing and/or Supplier
-developed (and Health Net approved) operational procedures (e.g., procedures
for successful back-outs, etc.). Create Problem reports for job abnormalities.

   X   

21.    Manage backup media inventory (e.g., tape, disk, optical and other media
type) including the ordering and distribution of media

   X   

22.    Responsibility for routine regular role swaps for all systems, including
iSeries High Availability Systems

   X   

23.    Perform periodic, incremental and full tape back-ups.

   X   

24.    Providing input/output processing support for activities such as loading
media, sending and receiving batch and electronic file transmissions (e.g. FTPs,
printing, etc.).

   X   

 

  (c) Without limiting the generality of the foregoing, Supplier shall perform
the following PDA server administration Functions:

 

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  (i) Applying standard security patches as necessary;

 

  (ii) Applying standard windows patches as necessary;

 

  (iii) Applying standard PDA patches as necessary; and

 

  (iv) Performing weekly server maintenance and database cleanup.

 

  3.7 Technical Support and Administration.

 

  (a) Supplier shall perform the following technical support and administration
activities:

 

  (i) Provide regular monitoring and reporting of system performance,
utilization and efficiency;

 

  (ii) Provide technical advice and support to the Application maintenance and
development staffs as reasonably required;

 

  (iii) Provide Health Net with reasonable access to any Documentation
(including updates thereto) for any new, enhanced or modified Systems Software
installed by Supplier;

 

  (iv) Provide information to Health Net about the functionality, architecture,
data and other aspects of the Systems Software, as reasonably requested by
Health Net;

 

  (v) Review all Systems Software conversion plans with Health Net;

 

  (vi) Make available to Health Net published benchmarks and resource
utilization statistics related to Systems Software release level upgrades.

 

  (vii) Perform systems tuning; provide reasonable support and advice to the
Applications development and maintenance staff on Applications Software tuning;
provide monthly performance reporting; and providing systems performance reviews
and advice.

 

  (viii) Manage DASD, including by monitoring and controlling storage
performance; assigning and initializing DASD volumes; determining data set and
volume placement; setting and maintaining DASD resource efficiency; maintaining
DASD standards as defined in the Procedures Manual; maintaining space
requirements according to Health Net forecasts; defining off-site storage
requirements; and managing catalogues and data migration documentation;

 

  (ix)

Perform analysis to optimize use of batch production resources, execute mass JCL
changes for programmers and End Users, and

 

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enforce JCL standards, as such standards are defined in the Procedures Manual;

 

  (x) Respond to reasonable requests for development/test/QA platform
availability as required by Health Net, and make such capacity available as
requested by Health Net-authorized End Users.

 

  (xi) Create, maintain and Refresh development/test/QA databases as a replica
of production databases; sanitize data in the development, test and QA
environments as required by Health Net’s standards and policies and as otherwise
requested by Health Net;

 

  (xii) Maintain the records necessary to track, manage and support warranty
service of such Equipment (e.g., serial number, program number, install date,
location);

 

  (xiii) Administer the day to day interfacing with third party maintenance
providers; and

 

  (xiv) Perform all Equipment recall remediation activities.

 

  3.8 Collaborative Computing and Support System Management Services.

Collaborative computing and support system management Services are those
Functions associated with the support of existing and future collaborative
computing tools (e.g. Domino, Tumbleweed, Axs-One, RightFax, BlackBerry,
Percussion, ServerAdmin Plus) and the following support system management tools
(e.g., Remedy/BMC, Evidant, and RespondNow), including the acquisition,
installation, upgrade, maintenance, support and tuning of System Software for
optimal performance. Without limiting Supplier’s obligations set forth elsewhere
in this Schedule A or the Agreement related to Equipment and Software, Supplier
shall also perform the collaborative computing and support system management
Services, including those Functions listed in the roles and responsibilities
table below, except for those Functions that are expressly identified as
retained Health Net responsibilities in the roles and responsibilities table
below.

Table 24. Collaborative Computing and Support Systems Services Roles and
Responsibilities

 

Collaborative Computing Services Roles and Responsibilities

   Supplier    Health Net

1.      Recommend collaborative computing and support system policies and
procedures.

   X   

2.      Participate in defining and accept collaborative computing and support
system policies and procedures, including with respect to mail, calendaring and
mail messaging delivery components and support system management components.

      X

3.      Install, test, provide technical support, database admin., and security
administration, for collaborative computing systems and support systems.

   X   

 

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Collaborative Computing Services Roles and Responsibilities

   Supplier    Health Net

4.      Provide technical assistance and subject matter expertise as required by
Health Net and other third parties for collaborative computing and support
system products and solutions.

   X   

5.      Provide administration, Equipment and Software installation,
configuration, and ongoing maintenance for production, development, and test
systems for the collaborative computing systems and the support systems.

   X   

6.      Perform configuration changes necessary while following change
management practices, to support collaborative computing and support system
Services.

   X   

7.      Propose creation, upgrade and Refresh requirements.

   X   

8.      Approve creation, upgrade and Refresh requirements.

      X

9.      Execute collaborative computing and support system creation, upgrade and
Refresh.

   X   

10.    Execute all collaborative computing system and support system
system-level changes (initialization parameters).

   X   

11.    Maintain Documentation for all collaborative computing and support system
parameters and system settings.

   X   

12.    Maintain consistency of collaborative computing and support system
parameters and system settings across all environments; consistency must be
maintained according to established development to QA to production life cycle.

   X   

13.    Define and execute collaborative computing and support system performance
tuning and maintain optimal performance.

   X   

14.    Implement and administer appropriate collaborative computing and support
system management tools across all collaborative computing and support system
instances. Performance metrics and historical data must be available for
trending and reporting.

   X   

15.    Provide technical assistance and subject matter expertise to Applications
developers and third parties.

   X   

16.    Maintain all appropriate collaborative computing and support system
configuration files and installation materials and provide upon request.

   X   

17.    Open, track, and manage to resolution all collaborative computing and
support system Problems with the appropriate collaborative computing OEM support
organization.

   X   

18.    Patch collaborative computing and support Systems Software as needed
according to established development to QA to production life cycle.

   X   

19.    Define collaborative computing and support system backup schedules,
retention periods levels (i.e. full, incremental, or differential), records
retention, and Legal Preservation Compliance requirements.

      X

20.    Execute Health Net’s collaborative computing and support system backup
and recovery policies.

   X   

 

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Collaborative Computing Services Roles and Responsibilities

   Supplier    Health Net

21.    Perform regular administration functions for Remedy, including: weekly
updates of CTIDs (Category, Type, Item, Details) and user profiles, password
resets as necessary, report and macro creation, permissions evaluation, e.g.
user license management, and annual maintenance.

   X   

22.    Manage the Remedy Knowledge Base including regularly updating it with
common solutions, known errors, and workarounds to expedite Incident resolution.

   X   

23.    Support administration of Rightfax servers and availability of
connections to applications requiring high volume faxes through the Rightfax
servers.

   X   

24.    Support existing Evidant probes as well as implement new probes on
Equipment and/or Software, as applicable. Troubleshoot existing probes as
required by Health Net.

   X   

25.    Create SAP OS-level accounts as requested.

   X   

26.    Setup requisite TSM management class (SAP Basis).

   X   

27.    Build UNIX print queues.

   X   

28.    Create/modify/remove interface directories as requested.

   X   

29.    Restore or modify interface files as requested.

   X   

30.    Terminate a print job as requested (UNIX-portion).

   X   

 

  3.9 Remote Access Facilities.

 

  (a) Remote access facility Services are those Functions associated with the
installation, management, operations, administration and support of those
systems that support remote access to computing facilities and services,
detailed herein (e.g. VPN, Citrix, Web-based mail, store and forward mail, PPP
dial up, etc.). Supplier shall perform the remote access facility Services,
including those Functions listed in the roles and responsibilities table below,
except for those Functions that are expressly identified as retained Health Net
responsibilities in the roles and responsibilities table below.

Table 25. Remote Access Facilities Roles and Responsibilities

 

Remote Access Facilities Roles and Responsibilities

   Supplier    Health Net

1.      Propose remote access services, standards, policies and procedures.

   X   

2.      Review and approve remote access services, standards, policies and
procedures; approve remote access policies and procedures.

      X

3.      Install, test, provide technical support, admin., and security
administration for remote access Equipment and Software.

   X   

4.      Install, test, maintain and support all Software and tools that enable
remote access facilities; support Health Net or its third party contractors as
necessary to troubleshoot issues with other software made available to Health
Net Service Recipients via the remote access facilities.

   X   

 

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Remote Access Facilities Roles and Responsibilities

   Supplier    Health Net

5.      Provide technical assistance and subject matter expertise as required by
Health Net and third parties for remote access products and solutions provided
as part of the Services

   X   

6.      Perform system or component configuration changes necessary to support
remote access services.

   X   

 

  (b) As part of the remote access facilities support Services, Supplier shall
also provide the following services:

 

  (i) Support, manage and maintain the access to the Citrix-enabled Applications
for remote users via VPN or Citrix. As of the Effective Date, the list of
Citrix-enabled Applications is set forth in Exhibit A-8 (Citrix Enabled
Applications).

 

  (ii) Manage supply of VPN or Citrix accounts based on demand from Service
Recipients who are working remotely; and

 

  (iii) In the event of a termination or resignation of a Health Net employee,
Health Net shall coordinate the return of such employee’s Equipment to Supplier
Personnel located at a Health Net Facility that is a Campus or a Metro Health
Net Facility. To facilitate this process, Supplier shall maintain and provide to
Health Net a list of such employee’s Equipment.

 

  3.10 Database Administration.

 

  (a) Database administration support Services are those Functions associated
with the maintenance and support of existing and future databases (e.g. MS SQL
server, Oracle, DB2, etc.). Supplier’s responsibilities in this regard include:

 

  (i) Managing data, data set placement, database performance, and data recovery
and integrity at a physical level;

 

  (ii) Performing database restores from export/DB dumps or backups;

 

  (iii) Implementing new database configuration;

 

  (iv) Performing database tuning,

 

  (v) Seting up test & development database environments;

 

  (vi) Supporting application upgrades including those for enterprise
applications (e.g. PeopleSoft);

 

  (vii) Scheduling and monitoring nightly database back-ups;

 

  (viii) Performing database Init Parameter modifications;

 

  (ix) Managing and cleaning the database audit trail and archive logs;

 

  (x) Supporting database distributed option;

 

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  (xi) Performing database upgrades and patches;

 

  (xii) Performing database monitoring including automatic trouble ticket
generation for Problems;

 

  (xiii) Performing security administration including managing role and user
database permissions in accordance with Health Net policies;

 

  (xiv) Performing security administration including managing role and user
database permissions in accordance with Health Net policies;

 

  (xv) Ensuring data integrity and implementing corrections;

 

  (xvi) Performing database support activities, including:

 

  (A) Managing database availability and resources;

 

  (B) Managing database space (allocated and used);

 

  (C) Performing day-to-day operational database capacity planning and
performance tuning;

 

  (D) Performing physical database maintenance (including running of appropriate
utilities, jobs, and working problems/updates to existing jobs as required);

 

  (E) Support data loads and unloads as required;

 

  (F) Monitoring the size of the physical database objects; and

 

  (G) Performing database reorganization, including to improve performance and
reclaim space.

 

  (xvii) Providing physical DBMS support for production application databases;

 

  (xviii) Executing and completing imports for data restores;

 

  (xix) Creating new databases and objects;

 

  (xx) Performing schema changes (e.g. creation, alteration, and deletion of
tables and indices, compilation and dropping of stored procedures and triggers);

 

  (xxi) Establishing and maintaining database configuration and system
parameters in a consistent manner across like database environments;

 

  (xxii) Executing processes for the proper maintenance and functioning of
databases, e.g. updating table/index statistics, dropping and rebuilding
tables/indices, etc.;

 

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  (xxiii) Determining file reorganization requirements, schedule and run
reorganizations;

 

  (xxiv) Managing database changes in accordance with Section 2.17 and with the
Health Net’s change management policies and procedures; and

 

  (xxv) Maintaining operational database documentation and the physical DBA
support process and desk-side procedure documentation.

 

  (b) Supplier shall perform the database administration Services, including
those Functions listed in the roles and responsibilities table below, except for
those Functions that are expressly identified as retained Health Net
responsibilities in the roles and responsibilities table below.

Table 26. Database Administration Roles and Responsibilities

 

Database Administration Roles and Responsibilities

   Supplier    Health Net

1.      Define authorization requirements for users, roles, schemas, etc. and
approve change requests.

      X

2.      Execute authorization change requests.

   X   

3.      Define database creation, upgrade and Refresh requirements.

      X

4.      Execute database creation, upgrade and Refresh.

   X   

5.      Execute all database system level changes (initialization parameters).

   X   

6.      Execute all schema changes for all instances.

   X   

7.      Define database data definition requirements for Software (MAC for
tables, triggers, attributes, etc.).

      X

8.      Execute database data definition requirements for Software (MAC for
tables, triggers, attributes, etc.).

   X   

9.      Maintain documentation for all database instance parameters and system
settings.

   X   

10.    Maintain consistency of non-sizing and non-platform specific database
parameters and system settings across all like instances; consistency must be
maintained according to established development to QA to production life cycle.

   X   

11.    Define database definition and manipulation requirements for Software and
developer schemas.

      X

12.    Execute database data definitions for non-managed Software and developer
schemas.

   X   

13.    Recommend and execute database performance and tuning scripts and keep
database running at optimal performance for Health Net’s workload.

   X   

14.    Implement and administer appropriate database management tools across all
database instances. Performance metrics and historical data must be available
for trending and reporting over a minimum of six (6) months.

   X   

 

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Database Administration Roles and Responsibilities

   Supplier    Health Net

15.    Identify and resolve locking conflicts, latch contention, rollback
requirements, etc. for all database instances.

   X   

16.    Provide technical assistance and subject matter expertise to Health Net
Applications developers and third-party Software vendors.

   X   

17.    Provide data dictionary expertise, Data Warehouse metadata definition,
data mapping functions and creation of data cubes.

      X

18.    Maintain DBMS software release matrix across non-production and
production environments for all operating system, database, and application
releases and patches.

   X   

19.    Maintain all appropriate database configuration files and provide needed
install materials to the managed help desk. Provide second-level help desk
support for Health Net access Problems.

   X   

20.    Open, track, and manage to resolution all database Problems with the
appropriate database support organization.

   X   

21.    Apply patches as required and follow Health Net’s development to QA to
production life cycle. Correlate internal change requests to vendor tracking
codes.

   X   

22.    Configure, install and maintain database communication Software.

   X   

23.    Manage Health Net’s database storage requirements.

   X   

24.    Develop database maintenance procedures.

   X   

25.    Review and approve security standards and maintenance procedures.

      X

26.    Define database backup schedules, retention periods, levels (i.e. full,
incremental, or differential).

      X

27.    Execute Health Net’s database backup and recovery policies.

   X   

28.    Recommend partitioned resources and/or server domains for application
performance/processing.

   X   

29.    Implement and maintain partitioned resources and/or server domains.

   X   

30.    Installing and upgrading server DBMS, operating systems.

   X   

 

  (c) Service Provider shall provide database administration Services for all
Health Net Data sets and Applications existing as of the Effective Date or
subsequently added during the Term.

 

  3.11 Middleware Administration.

 

  (a)

Middleware administration support Services are those Functions associated with
the maintenance and support of existing and future Middleware (e.g. BEA
Weblogic, AquaLogic Service Bus, Tibco Rendezvous, HP WSIT, Apache, Argus).
“Middleware” means Systems Software that provides (i) the runtime hosting
environment (a container) for Application program logic using embedded or
external communication Middleware to help programs interact with other programs;
(ii) resource management Services for hosting Application program logic at
runtime; and (iii) interfaces to one or several forms of communication
Middleware (oneway messaging and request/reply).

 

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The full collection of all interfaces provided by a Middleware product
represents a programming model. Supplier shall perform the Middleware
administration support Services, including:

 

  (i) Creating and Refreshing development/test/QA instances;

 

  (ii) Configuring new Middleware;

 

  (iii) Managing and cleaning audit trails and logs;

 

  (iv) Performing upgrades and patches;

 

  (v) Manage automatic trouble ticket generation for Problems;

 

  (vi) Performing security administration activities, including managing role
and user permissions in accordance with Health Net policies;

 

  (vii) Verifying data integrity and implementing corrections;

 

  (viii) Perform performance monitoring, analysis, and tuning;

 

  (ix) Performing object changes (e.g. creation, alteration, and deletion of
objects);

 

  (x) Establishing and maintaining configuration and system parameters in a
consistent manner across like server environments; and

 

  (xi) Maintaining operational administration of Middleware, including by
performing load balancing, tuning, configuration management, etc.

 

  (b) Supplier shall perform the Middleware administration Services, including
those Functions listed in the roles and responsibilities table below, except for
those Functions that are expressly identified as retained Health Net
responsibilities in the roles and responsibilities table below.

Table 27. Middleware Administration Roles and Responsibilities

 

Middleware Administration Roles and Responsibilities

   Supplier    Health Net

1.      Define authorization requirements for users, roles, objects, etc. and
approve change requests.

      X

2.      Execute authorization change requests.

   X   

3.      Define Middleware creation, upgrade and Refresh requirements.

      X

4.      Execute Middleware creation, upgrade and Refresh.

   X   

5.      Execute all Middleware system level changes (initialization parameters)

   X   

6.      Execute all object changes for all instances.

   X   

 

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Middleware Administration Roles and Responsibilities

   Supplier    Health Net

7.      Maintain Documentation for all Middleware instance parameters and system
settings.

   X   

8.      Maintain consistency of non-sizing and non-platform specific Middleware
parameters and system settings across all like instances; consistency must be
maintained according to established development to QA to production life cycle.

   X   

9.      Define and execute Middleware performance tuning and keep Middleware
running at optimal performance for Health Net’s workload.

   X   

10.    Implement and administer appropriate Middleware management tools across
all Middleware instances. Performance metrics and historical data must be
available for trending and reporting over a minimum of 6 months.

   X   

11.    Identify and resolve conflicts, contention, rollback requirements, etc.
for all Middleware instances.

   X   

12.    Provide technical assistance and subject matter expertise to Health Net
and third parties.

   X   

13.    Maintain all Middleware configuration files and provide needed install
materials to the managed help desk.

   X   

14.    Open, track, and manage to resolution Middleware Problems with the
appropriate help desk / support organization.

   X   

15.    Apply patches as required and following Health Net’s development to QA to
production life cycle. Correlate internal change request to vendor tracking
codes.

   X   

16.    Configure, install and maintain Middleware communication Software.

   X   

17.    Define Middleware backup schedules, retention periods, levels (i.e. full,
incremental, or differential)

      X

18.    Execute Health Net’s Middleware backup and recovery policies.

   X   

19.    Supporting Application development and production Incidents and Problems,
including by working with Health Net or other third parties.

   X   

 

  3.12 Messaging Services.

In addition to the Services applicable to all Servers, Supplier shall provide
the required Supplier Personnel resources for the administration and support of
Health Net’s messaging environment, including the administration of Servers,
support of the messaging architecture, collecting and reporting messaging
specific data, and technical support, including those Functions listed in the
roles and responsibilities table below, except for those Functions that are
expressly identified as retained Health Net responsibilities in the roles and
responsibilities table below.

Table 28. Messaging Roles and Responsibilities

 

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Messaging Roles and Responsibilities

   Supplier    Health Net

1.      Provide administration of the messaging domains and servers, including
e-mail, internet mail, public folders, gateways and other any agreed to Health
Net approved messaging components.

   X   

2.      Proactively monitor and support the status and operation of Health Net’s
messaging architecture.

   X   

3.      Proactively monitor the status of all messaging Servers and messaging
Software.

   X   

4.      Execute the appropriate alerts for messaging Servers and messaging
Software and take the appropriate steps to return the messaging Software to
service.

   X   

5.      Provide and maintain referral contacts for messaging Software.

      X

6.      Provide information about the points of activity to monitor within each
messaging Software.

      X

7.      Provide design and configuration changes to Health Net distributed
systems environment for Software.

   X   

8.      Provide technical support for the development and staging of the
messaging environment.

   X   

9.      Provide Systems Software support for the messaging development
environments.

   X   

10.    Educate, train and inform help desk staff on messaging Software changes,
enhancements and modifications.

   X   

11.    Provide backup and recovery services for individual mailboxes.

   X   

12.    Maintain Health Net managed distribution lists.

   X   

13.    Provide names of Health Net managed messaging distribution lists and
policies identifying distribution list membership policies, and identify
existing tools and procedures to streamline distribution list maintenance.

      X

 

4. DATA NETWORK SERVICES

 

  (a) “Data Network Services” means those Functions necessary to analyze, plan,
design, implement, operate, maintain, monitor, and manage the Data Network. Data
Network Services include (i) those Functions described in this Section 4, and
(ii) the O&M Services and the Enterprise Security Management Services, each as
they apply to the Functions, Equipment, Software, process, or other activities
described in this Section 4.

 

  (b) “Data Network” shall mean the Health Net enterprise data transport network
that interconnects the Health Net corporate headquarters in Woodland Hills, CA
with its data centers, business units, End User locations, business partners,
and customers. The enterprise Data Network consists of Local Area Networks
(LANs) (including any wireless networks) at the Health Net data centers and at
the Health Net Facilities listed on Schedule F, the Metropolitan Area Network
(MAN) SONET rings at the Woodland Hills, CA location and the Rancho Cordova Data
Center; a Wide Area Network (WAN) that interconnects all the Health Net
locations; and Remote Access Services (RAS) network components.

 

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  4.1 Planning and Analysis.

Supplier shall perform the planning and analysis Services, including those
Functions listed in the roles and responsibilities table below, except for those
Functions that are expressly identified as retained Health Net responsibilities
in the roles and responsibilities table below.

Table 29. Planning and Analysis Roles and Responsibilities

 

Planning and Analysis Roles and Responsibilities

   Supplier    Health Net

1.      Recommend design enhancements and standards for the Health Net Data
Network, including wireless network services.

   X   

2.      Review and approve design enhancements and standards for the Health Net
Data Network, including wireless network services.

      X

3.      Perform business liaison function to Health Net business and operational
units

      X

4.      Perform the Data Network Services-related business liaison function to
Health Net network services vendors and suppliers for capacity planning and
analysis.

   X   

5.      Perform technical planning assistance with Health Net IT technical staff
for capacity and performance for the Health Net Data Network

   X   

 

  4.2 Asset Acquisition and Management.

Supplier shall perform the asset acquisition and management Services, including
those Functions listed in the roles and responsibilities table below, except for
those Functions that are expressly identified as retained Health Net
responsibilities in the roles and responsibilities table below.

Table 30. Asset Acquisition and Management Roles and Responsibilities

 

Asset Acquisition and Management Roles and Responsibilities

   Supplier    Health Net

1.      

     

2.      Provide Health Net Data Network Services, including network devices,
connectivity, circuits and services as defined by Health Net

   X   

3.      Configure network Equipment and Software prior to installation, as
appropriate.

   X   

4.      Manage and maintain router/switch configuration files.

   X   

 

  4.3 Engineering/Development.

Supplier shall perform the following engineering and development Services:

 

  (a) Plan, analyze, develop, design, and engineer the Data Network Services;

 

  (b) Provide, operate, maintain, and manage the network monitoring and
management tools;

 

  (c) Provide design and development engineering services for all Data Network
devices, such as hubs, switches, routers, network appliances, VPN concentrators,
firewall devices, and wiring and cabling services; and

 

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  (d) Select, configure, and implement data network Equipment and Software.

 

  4.4 Integration and Testing.

Supplier shall perform the following integration and testing Services:

 

  (a) Verify that all individual networking communications components configured
with or added to the infrastructure work together properly as a cohesive
networking environment, performing all of the intended functions; and

 

  (b) Make adjustments to Health Net’s network infrastructure as a result of
changes to architectural standards or discovered security vulnerabilities.

 

  4.5 Implementation and Migration.

Supplier shall perform the following implementation and migration Services:

 

  (a) Install new and upgraded Equipment, Software, including premise wiring and
cabling, network configurations (e.g., switches, routers, VPN appliances,
Wireless LANs, Firewalls, and transmission facilities defined in WAN services
configuration), and system management tools;

 

  (b) Perform network upgrades as a result of those new and enhanced
applications and architectures that are implemented in accordance with the
change and release management processes described in Section 2.17; and

 

  (c) Perform migration of data, either electronic or manual, for network system
management repositories, address tables, Management Information Bases (MIBs),
and other network management elements.

 

  4.6 Circuit Support Services.

Circuit support Services are those voice and data Functions associated with
planning, designing and operating the various voice and data network
technologies and services. The supplier shall perform capacity planning, design,
configuration and ongoing monitoring of services required to support projects
and operational initiatives as defined in the table below, except those
functions that are expressly identified and retained Health Net responsibilities
in the roles and responsibilities table below.

Table 31. Circuit Support Services Roles and Responsibilities

 

Planning and Analysis Roles and Responsibilities

   Supplier    Health Net

1.      Provide capacity monitoring and planning on all Voice Network and Data
Network circuits and other network Equipment and inform Health Net when capacity
issues arise that require an increase in circuit bandwidth or network capacity.

   X   

2.      Establish technology standards for the WAN and LAN technologies,
services and capacity.

      X

 

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Planning and Analysis Roles and Responsibilities

   Supplier    Health Net

3.      Provide WAN, LAN design services, including any complex design solutions
proposed, that are in compliance with Health Net technology and service
standards in support of operational, project or engineering requests.

   X   

4.      Review and approve all WAN, LAN designs, including any complex design
solutions proposed.

      X

5.      Establish standards for Equipment configuration, documentation and
addressing.

      X

6.      Manage Equipment configuration and implementation activities per Health
Net defined standards required to support ongoing circuit operational and
implementation activities.

   X   

7.      Manage Equipment configuration and documentation files and back-ups so
that service restoral times are minimized for Health Net customer, business
partners and associates.

   X   

8.      Provide active monitoring of all Health Net circuit facilities so that
all errors, alarms and alerts are resolved in a manner providing the minimum
impact or disruption to Health Net operations.

   X   

9.      Manage vendors and vendor contracts required to support Health Net
voice, data and converged network services to minimize service disruption and
maximize performance and through put of the networks.

   X   

 

  4.7 Operations and Administration.

Supplier shall perform the following operations and administration Services:

 

  (a) Operations activities, including:

 

  (i) Network systems management and troubleshooting (for example, performance,
Problem, change and capacity monitoring);

 

  (ii) Bandwidth management;

 

  (iii) Monitoring protocol usage statistics (for example, identify top talkers
by protocol);

 

  (iv) Working with public carriers and other circuit providers to implement new
or upgraded Data Network Equipment and Software; and

 

  (v) Working with public carriers and other circuit providers to perform the
operations and administration Services;

 

  (vi) Respond, repair and restore the Services, Equipment and Software to their
prior working state and configuration after a response to Network and Equipment
errors, alarms, and alerts; and

 

  (vii)

Provide comprehensive monitoring services on a continuous basis for all network
circuits, Equipment and Services. The Supplier

 

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will promptly respond to all monitored events to minimize the impact to Health
Net Service Recipients.

 

  (b) Administration services, including:

 

  (i) Managing router/switch configurations, firewalls, Internet Protocol (IP)
addresses, providing Internet access, and administration of Domain Name Service
(DNS) and DHCP, and administration of the Health Net-approved Internet URL
Filtering;

 

  (ii) Providing volume/metric data (or web portal access to data) for services,
reporting services as agreed with Health Net;

 

  (iii) Performing physical and logical administration of network Equipment and
Software, including performing IMACs in accordance with Section 2.8;

 

  (iv) Managing and maintaining all Data Network devices, including the
Equipment and Software, that are required to provide the Services; and.

 

  (v) Performing the services decsribed in Section 5.5(b)(iii) for the Data
Network Services, including with respect to data transport services.

 

  (c) Supplier shall perform the operations and administration Services,
including those Functions listed in the roles and responsibilities table below,
except for those Functions that are expressly identified as retained Health Net
responsibilities in the roles and responsibilities table below.

Table 32. Operations and Administration Roles and Responsibilities

 

Operations and Administration Roles and Responsibilities

   Supplier    Health Net

1.      Provide LAN (virtual LAN [VLAN], wireless) communications, including all
network traffic originating from desktop devices, file and print servers,
Application servers, database servers, peripherals, firewall/routers, network
printers and other network devices. This service ends at the interface to the
edge device at the WAN.

   X   

2.      Perform quality control reviews of the Data Network Services and
administration polices to verify in compliance with the Agreement and Health Net
policies and procedures

   X   

3.      Define categories of content & users for internet content filtering and
monitoring.

      X

4.      Monitor internet content filtering configuration, administration &
reporting.

   X   

5.      Perform day-to-day operations and administration activities as defined
above.

   X   

6.      Perform system backups and handle per established procedures.

   X   

7.      Respond quickly and efficiently to all installation and maintenance
initiatives.

   X   

 

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Operations and Administration Roles and Responsibilities

   Supplier    Health Net

8.      Managing network Quality of Service (QoS) parameters to maintain
bandwidth allocation and prioritization of Software within Health Net’s network.

   X   

9.      Provide Data Network engineering activities in support of the Health Net
business continuity contract for the Health Net call centers mobile call center
trailers during disaster recovery Testing and disaster recovery events.

     

 

  4.8 Network Performance Management.

Network performance management Services are those Functions associated with
managing, monitoring and tuning the various networks. Supplier shall perform the
Network performance management Services, including those Functions listed in the
roles and responsibilities table below, except for those Functions that are
expressly identified as retained Health Net responsibilities in the roles and
responsibilities table below.

Table 33. Network Performance Management Roles and Responsibilities

 

Network Performance Management Roles and Responsibilities

   Supplier    Health Net

1.      Develop and document network performance requirements and projections.

   X   

2.      Develop and document performance management procedures that meet
requirements and adhere to defined policies.

   X   

3.      Approve performance management procedures.

      X

4.      Perform tuning to maintain optimum performance across the network.

   X   

5.      Manage network resources, devices and traffic to meet defined
availability and performance Service Levels and other performance requirements.

   X   

6.      Provide technical advice and support to the Application maintenance and
development staffs as required.

   X   

7.      Evaluate, identify and recommend configurations or changes to
configurations which will enhance network performance.

   X   

8.      Develop improvement plans as appropriate.

   X   

9.      Authorize improvement plans.

      X

10.    Implement improvement plans. Coordinate with Service Recipients and other
third-parties as necessary.

   X   

 

  4.9 Local Area Network (LAN) Services.

 

  (a) LAN Services mean those activities associated with (a) providing of LAN
(wired and wireless) communications, including Dynamic Host Control Protocol
(DHCP)/Domain Name Server (DNS) administration, and (b) supporting all network
traffic originating from desktop devices, file and print servers, Application
servers, database servers, peripherals, firewalls/routers and, other
LAN-attached network devices. LAN Services provide the interconnection for
Health Net user groups to the WAN. Supplier shall be responsible for performing
all LAN Services, including the supporting of all wireless access points (WAPs),
which must be located behind Health Net firewalls. Supplier shall authenticate
all connections to these wireless access points.

 

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  (b) The following are the relevant demarcation points within, between and
among the LAN:

 

  (i) The demarcation point between the LAN and the WAN is the LAN port on the
WAN router.; and

 

  (ii) The demarcation point between the LAN and a network end point device
(e.g., computer workstation, IP phone, server) is the proximal ethernet LAN port
to that device inclusive of an ethernet cable not longer than twenty (20) feet.

 

  (c) For the avoidance of doubt, LAN Services does not include in-wall wiring
and in-wall cabling.

 

  4.10 Wide Area Network (WAN) Services.

WAN Services mean those Functions associated with the provision of WAN
communications, commencing at the LAN port on the WAN router, including all
transport services and all network traffic between the WAN and the LAN. The WAN
service transports customer information between major locations and branch
offices in the enterprise. The WAN also allows interface to external wide-area
services delivered by other providers. Supplier shall be responsible for
performing all WAN Services.

 

  4.11 Metropolitan Area Network (MAN) Services.

The MAN Services means those Functions associated with the provision of the
SONET-based access, connectivity, and transport MAN at the Woodland Hills, CA
corporate headquarters and the locations and services attached to the SONET ring
at that location and the Rancho Cordova Data Center and locations and services
attached to the SONET ring at that location.

 

  4.12 Virtual Private Network (VPN) Services.

 

  (a) VPN Services are those Functions associated with operating and maintaining
Health Net’s Virtual Private Network, including:

 

  (i) Providing dedicated site-to-site VPN, as well as Remote Access Services
VPN connectivity on a shared public IP network using industry/Internet-based
standards for security to create and preserve privacy, data integrity, and
authenticity;

 

  (ii) Making available remote access to the Health Net network for Health-Net
approved Service Recipients;

 

  (iii) Implementing, managing and maintaining remote access gateways at all
Health Net Facilities;

 

  (iv) Providing remote access services (RAS) client Software and connectivity
for IP VPN access;

 

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  (v) Developing technical documentation and drawings that are necessary to
maintain services; and

 

  (vi) Providing network monitoring and testing capability.

 

  (b) Supplier shall perform the VPN Services, including those Functions listed
in the roles and responsibilities table below, except for those Functions that
are expressly identified as retained Health Net responsibilities in the roles
and responsibilities table below.

Table 34. VPN Services Roles and Responsibilities

 

VPN Services Roles and Responsibilities

   Supplier    Health Net

1.      Provide support for dedicated site to site VPN and Remote Access
Services VPN connectivity on a shared public IP network.

   X   

2.      Provide technical drawings and documentation of the VPN network.

   X   

3.      Review and approve VPN network design documents.

      X

4.      Provide monitoring, management, and testing of the VPN network.

   X   

5.      Provide access approvals for Health Net Service Recipients.

      X

6.      Implement rule changes for the VPN network and maintain approved access
lists for Health Net Service Recipients.

   X   

7.      Review and approve VPN baseline alerts and thresholds.

      X

8.      Provide general management reporting on VPN services.

   X   

9.      Provide periodic VPN audits.

   X   

10.    Review and approve periodic audit plans and audit reports/results.

      X

 

5. VOICE NETWORK SERVICES

 

  (a) “Voice Network Services” means those Functions necessary to analyze, plan,
design, implement, operate, maintain, monitor, and manage the Voice Network.
Voice Network Services include (i) those Functions described in this Section 5,
and (ii) the O&M Services and the Enterprise Security Management Services, each
as they apply to the Functions, Equipment, Software, process, or other
activities described in this Section 5.

 

  (b) “Voice Network” means the HealthNet enterprise voice transport network
(including all Equipment and Software) that interconnects the Health Net
corporate headquarters in Woodland Hills, CA with its data centers, business
units, End User locations, business partners, and customers. The Voice Network
includes user access devices (such as analog and IP telephones, Software-based
soft phones, mobile telephones, etc), access circuits, transport circuits, and
voice switches (PBX, Key System, Call Managers, Voice Gateways, ACD).

 

  5.1 General Obligations.

 

  (a) The Voice Network Services will be available to Health Net Service
Recipients, as approved by Health Net.

 

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  (b) Supplier will manage and maintain all Equipment, lines and circuits
related to the Voice Network and shall assume responsibility for the operation
of the Voice Network and services, including Voice Network management, common
carrier and local access management, Equipment design, circuit ordering,
maintenance coordination, and Problem prevention, identification, and
resolution.

 

  (c) Without limiting Supplier’s responsibilities as set forth elsewhere in
this Section 5 or with respect to the O&M Services, Supplier’s overall Voice
Network responsibilities include the following Functions:

 

  (i) Manage and monitor connectivity between all Voice Network locations.

 

  (ii) Maintain the Voice Network lines and circuits, including as needed to
meet the Service Levels and other performance metrics.

 

  (iii) Upon Health Net’s request, reallocate the bandwidth assignment of the
Voice Network circuits.

 

  (iv) Perform changes to the Voice Network based on receipt of a Service
Request in accordance with Section 7.5 or otherwise as needed to perform the
Services.

 

  (v) Manage Voice Network Equipment, Software and Services for all maintenance
and upgrade activities.

 

  (vi) Coordinate and scheduling planned Voice Network outages related to
installation and maintenance during off-peak hours and only after Health Net
approval.

 

  (vii) For any non-scheduled outages, provide Health Net with a detailed
explanation that identifies the regional impact, how the outage occurred, and
what preventative measures are being taken to prevent such an outage in the
future.

 

  (viii) Serve as a single-point-of-contact for all Voice Network requirements.

 

  (ix) Coordinate with inter-exchange carriers and other applicable third party
vendors to provide connectivity.

 

  (x) Identify and resolve Incidents and Problems on the Voice Network.

 

  (xi) Identify possible product and enhancement opportunities for improved
performance and potential cost savings.

 

  (xii) To the extent the Voice Network is capable (either in its existing form
or via configuration changes or other similar modifications other than Equipment
and Software upgrades), provide call accounting support to manage and monitor
per-call activity. These services include on-going daily checks, and input of
MACs, circuits, 800 numbers, long-distance authorization codes.

 

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  (xiii) Perform Problem reporting and reconciliation of invoices with call
accounting data, including call detail reporting.

 

  (xiv) Maintain long distance authorization code database; perform updates
(adds, deletes, changes) to such database based on approved changes submitted by
Health Net; coordinate updates with adds, deletes, and changes (location and
names).

 

  (xv) Perform administration of Direct Inward Dial (DID) number.

 

  (xvi) Perform administration of Dial modems including configuring, maintaining
and testing of remote voice systems monitoring.

 

  (xvii) Perform administration and support of ACD (manage, monitor, configure,
etc.).

 

  (xviii) Perform voicemail monitoring including administration.

 

  (xix) Perform IVR support, including supporting the ACD trunking (talk-path
and signaling channel) infrastructure that serve both Health Net and business
partner IVRs . Health Net’s network IVR contains interfaces and integration
points to existing host platforms/Software (for example, a Middleware interface
to Symphony, the Nortel ACD environment, and call flow). Supplier shall support
and provide general administration Services for such interfaces, integration
points, platforms, systems and their interfaces (ex: Middleware, Nortel ACD,
call routing.)

 

  (xx) Supplier should provide support for the In-Scope CTI Interfaces,
including by performing the following:

 

  (A) Provide CTI engineering services

 

  (B) Consult with other IT teams or external partners to develop and implement
standard architecture for CTI instances.

 

  (C) Produce logical network data flow diagrams for each CTI instance.

 

  (D) Involvement with security engineering team to verify CTI instances meet
all existing Health Net security practices and requirements and implement
corrective measures in the event of any deficiencies.

 

  (E) Attend project-related meetings as necessary, including but not limited to
project status meetings, requirements gathering, design reviews, and
implementation planning.

 

  (F) Perform 2nd and 3rd level CTI technology support to detect and isolate
Problems with CTI instances. Provide root cause analysis support and
participation for Problems or issues that may occur in the Health Net
environment or that of a partner CTI instance.

 

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  (G) Support of internal, external, or customer-based audits and assessments of
CTI instances as required.

 

  (H) Interface with Service Recipients or other third party vendors as needed
by the business units in support of specific requests / Problems.

 

  (I) Troubleshoot issues and evaluating new connectivity/products/etc.

 

  (J) Participate with team members and technical groups in process
improvements, projects/initiative task handoffs between the various teams or
project prioritization / coordination.

 

  (d) “In-Scope CTI Interfaces” means the following CTI interfaces: (i) the CTI
instance between the Health Net Aspect Spectrum ACD and a business partner’s
Genesys T-Server environment via the custom connector (Health Net owned) for
CallPath; (ii) the CTI instance between the Health Net Aspect Spectrum ACD and
the Health Net Etalk quality monitoring environment; (iii) the CTI instance
between the Health Net Aspect Spectrum ACD and the Health Net EWFM agent
scheduling environment; and (iv) the CTI instance between the Health Net Aspect
Spectrum ACD and the Health NetCentergistics and Alpha American Reader Board
environment.

 

  (e) Supplier shall perform the following Voice Network control Functions,
including by performing level 3 / OEM support and contacting and coordinating
with third parties, as necessary:

 

  (i) Monitor and control systems; allocate resources (using standard
configurations) and necessary and in a timely and accurate manner.

 

  (ii) Define and document system configurations and operating instructions;
monitor Voice Network operations and log & report all Software, hardware and
network failures.

 

  (iii) Respond to Voice Network trouble tickets and answer and respond to
requests, based on Priority and refer complex issues or Problems to the
appropriate support organization.

 

  (iv) Manage and respond to Voice Network trouble tickets and perform Incident
and Problem determination and resolution; escalate Incidents and Problems in
accordance with Health Net’s policies and procedures; and

 

  (v) Manage Service Levels and coordinate daily operation with third party
voice service providers (including LECs, Carriers, and Equipment and Software
maintenance providers).

 

  (f) For Voice Equipment, Supplier’s solution will support:

 

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  (i) Planning, implementation, and administration of premise voice Equipment at
all Health Net locations, including but not limited to analog, digital, private
branch exchange (PBX), ACD Systems, voice mail, voice over IP (VoIP), other
proprietary systems, Integrated Services Digital Network (ISDN), telephone sets,
electronic key systems, and systems providing compatible functionality; and

 

  (ii) Installation, configuration, and maintenance of voice telecommunications
dial-up Equipment and Software, such as modem pools.

 

  5.2 Planning and Analysis.

Supplier shall perform the planning and analysis Services, including those
Functions listed in the roles and responsibilities table below, except for those
Functions that are expressly identified as retained Health Net responsibilities
in the roles and responsibilities table below.

Table 35. Planning and Analysis Roles and Responsibilities

 

Planning and Analysis Roles and Responsibilities

   Supplier    Health Net

1.      Perform business and technical liaison function to Health Net network
vendors suppliers and carriers for capacity planning and analysis.

   X   

2.      Develop a capacity and performance plan.

   X   

3.      Review and approve the capacity and performance plan.

      X

 

  5.3 Asset Acquisition and Management.

Supplier shall perform the asset acquisition and management Services, including:

 

  (a) Order and expedite circuits and other network Equipment and Services as
defined by Health Net;

 

  (b) Configure Voice Network components (e.g., Equipment, Software and Software
Circuits) prior to installation, as appropriate; and

 

  (c) Manage voice system/switch configuration files.

 

  5.4 Implementation and Migration.

Supplier shall perform, upon the receipt of a Service Request or otherwise as
needed to perform the Services, the following implementation and migration
Services:

 

  (a) Installing new and upgraded Equipment and Software, including reasonable
cabling for existing Health Net Facilities (including cabling within the Health
Net data centers), Ethernet power modules, Systems Software components and
transmission facilities;

 

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  (b) Performing data migration from existing systems to any new systems, by
either electronic or manual methods; and

 

  (c) Coordinating with other Health Net business areas or external third
parties as may be required to perform the Services.

 

  5.5 Operations and Administration.

Supplier shall perform the following operations and administration Services:

 

  (a) Operations Services, including:

 

  (i) System monitoring of log files, table sizes, etc.

 

  (ii) Data backup and recovery; and

 

  (iii) Voice system security monitoring activities in accordance with Health
Net security policies to the extent the Voice Network is capable (either in its
existing form or via configuration changes or other similar modifications other
than Equipment and Software upgrades).

 

  (b) Administration services, including:

 

  (i) Provide account administration for telecom Services, including for third
party hosted, web, audio only conferencing and calling cards via the Health Net
request management tool (Health Net’s IS Request system, as of the Effective
Date), including creating new accounts, account activations and modifying,
deleting existing accounts. Overall administration Services will include:

 

  (A) Support of a database of calling cards;

 

  (B) Creatiion of new accounts, perform account activations, and modify and/or
delete existing accounts;

 

  (C) Manage End User initiated and approved requests, and related workflow;

 

  (D) Fulfill End User requests;

 

  (E) Track daily orders to completion/cancellation, with target response times
to complete as required by Health Net, and as defined in the Procedures Manual;

 

  (F) Monitor daily Health Net employee termination reports to suspend
terminated Health Net employees’ accounts for these services; and

 

  (G) Review monthly invoices and report to Health Net on any observed trends,
including usage abuse.

 

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  (ii) Perform physical and logical installations, moves, adds and changes
(IMACs), including:

 

  (A) Manage IMAC Service Requests via the Health Net IS Request Telecom
sub-system (or other similar workflow based repository, as approved by Health
Net), including by:

 

  •  

Owning the intake queue, assessing and acting on each request.

 

  •  

Performing IMAC activities related to telephones, telephone lines, modems, fax
lines or call center phone activities, remotely or by assigning a technician to
complete the MAC in-person on-site, as required by Health Net. For requests
exceeding ten (10) or more MACs, seek Health Net approval for project
requirements.

 

  •  

Alert Health Net for non-standard Services requests and requests that are
potential security violations, as defined in the Procedures Manual, and seek
approval for all such requests before provisioning. Examples of such requests
include: off net call forward and trunk-to-trunk transfers, requests for a
modem.

 

  •  

Daily, track requests to completion/cancellation with target response times to
complete (including forwarded requests), as required.

 

  (B) Manage both on-site and remote-site MAC activity. The Move, Add, Change
(MAC) projects should be tracked and documented per Health Net requirements. All
billable repair work should be tracked through Remedy tickets and documented per
Health Net requirements. The process followed by Supplier should provide the
necessary documentation trail for invoices to IS Requests, MAC activity, and
break/fix activity. Specifically Supplier should provide:

 

  •  

For Voice MACs: (i) maintenance on Nortel, Cisco/IPTel, Aspect technology voice
platforms (or other technology platforms as used by Health Net) and
(ii) response to requests including phone moves, change designations on
instruments etc.; and

 

  •  

For Voice/data circuits: Provision paper-based, manual or automated requests for
circuits to support changes to Health Net’s business locations.

 

  (iii) Supplier will manage the inventory of telecom services (where such
services may be for voice and data networks), by performing the following:

 

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  (A) Administer the Rivermine Telecom Expense Management (TEM) application.
Rivermine is used for the processing, coding, and paying of all telecom invoices
received by Health Net. Rivermine also provides the circuit inventory and
management function, and the vendor order process.

 

  (B) Maintain a detailed inventory of telecom services provided to Health Net
and conduct periodic audits to the system including port level billed versus
in-use services and remove unused or obsolete services.

 

  (C) Manage incoming vendor invoice charges for voice and data network services
from both local and IXC carrier/providers, via both manual & EDI interfaces and
support timely and accurate payment of all Health Net telecom billing. Provide
relevant information on telecom charges to designated Health Net representatives
to enable the administration of associated cost center and Health Net internal
charge-backs. Supplier will also:

 

  •  

Validate that order and disconnect requests for all voice and data circuits are
reflected correctly on bills; report to Health Net any anomalies or issues and
per Health Net’s approval resolve them with the carrier.

 

  •  

Validate billing against contract and tariff rates plus recent payment history
and report to Health Net on any observed trends.

 

  •  

Support Health Net by providing requesting information as needed, if they choose
to audit telecom activity and billing validation efforts.

 

  •  

Conduct monthly analysis and reporting of billing issues or trends (including
analysis of bursting fees versus port speed adjustments) impacting budget and
budget forecast and report Health Net on any observed trends.

 

  •  

Perform timely performance of analysis to ensure no late fees are assessed and
no service disconnects occur due to late or missed payments.

 

  •  

Maintain cost center allocation of all telecom charges to each line of business,
including investigation and resolution of invoiced telecom services not
previously allocated to a business cost center.

 

  •  

Provide telecom circuit ordering and associated test and billing activity per
Health Net required turn-up dates.

 

  (c) Supplier shall also perform those Functions listed in the roles and
responsibilities table below.

 

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Table 36. Operations and Administration Roles and Responsibilities

 

Operations and Administration Roles and Responsibilities

   Supplier    Health Net

1.      Provide network operations center (NOC) functions (including all
Equipment, Software, and resources) necessary to continuously monitor service
delivery

   X   

2.      Perform quality reviews of operations and administration polices for
compliance with Health Net security policies.

   X   

3.      Perform day-to-day operations and administration activities as defined
above

   X   

4.      Perform interface liaison with public carriers and voice services
suppliers.

   X   

5.      Perform interface liaison with other third-party service providers as
necessary to support the Voice Network.

   X   

6.      Provide installation and maintenance Services for the Voice Network.

   X   

7.      Provide Voice Network engineering services in support of the Health Net
business continuity contract for the Health Net call centers mobile call center
trailers during disaster recovery testing and disaster recovery events.

   X   

 

  5.6 Desk Phone Service.

 

  (a) Supplier shall perform the Functions necessary to provide, implement,
support, monitor, and maintain the Equipment and dial tone necessary to get
traditional telephone service to Health Net, including planning and assessment,
implementation, training as described in Section 2.18 of this Schedule A
(Services) and ongoing management of the telephone service, PBX Equipment,
telephone Equipment, and auxiliary Equipment, so that End Users can (as
permitted by Health Net policies and procedures) receive incoming calls and make
intra-campus, inter-campus, outside local, outside long distance, and
international calls (the “Desk Phone Services”). Desk Phone Services includes
all of the services described in this Section 5.6 as well as support for soft
phones running directly on desktops/workstations without the use of additional
voice instrument.

 

  (b) Supplier shall, as part of the Desk Phone Services, support all telephone
and auxiliary Equipment, including feature rich single-line telephones,
multi-line telephones, consoles, and auxiliary Equipment such as headsets,
speakerphones, and add-on modules.

 

  (c) Supplier shall also, as part of the Desk Phone Services, make available
the following telephone features at the Health Net Facilities:

 

  (i) Connectivity at Health Net Facilities to the handset and headset with
local and long distance voice services;

 

  (ii) Number portability (campus portability);

 

  (iii) Conference room speaker phones;

 

  (iv) Lobby and other common area telephones;

 

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  (v) Intra-premise circuits;

 

  (vi) Alternate paths (as necessary) required to meet Service Levels;

 

  (vii) Local Service connectivity: including:

 

  (A) Local connectivity with access to (i) other telephone numbers in the same
system (e.g., an internal call), (ii) the local dial area, (iii) long distance,
(iv) station Equipment (e.g., telephone sets and other Equipment), and
(v) inbound toll-free services;

 

  (B) A proposed migration plan from analog to digital or other
emerging/converging technologies;

 

  (C) To the extent the Voice Network is capable (either in its existing form or
via configuration changes or other similar modifications other than Equipment
and Software upgrades), Supplier is accountable to configure the Equipment and
Services to prevent fraudulent billing to Health Net lines (e.g., third-party
billed, 900/976 and collect calls); and

 

  (D) Telephone sets as approved by Health Net for authorized users.

 

  (viii) Wireless Headset and Handsets;

 

  (A) On system and/or on premises (within building) wireless service;

 

  (B) Minimum and maximum ranges for single system antennas/handsets;

 

  (C) Engineering services for initial deployment and subsequent annual
engineering premise check and adjustment of antenna/base Equipment to encompass
a facility;

 

  (D) Support for related Equipment, including wireless phones and associated
Equipment (e.g., antennas, coax, duplexers, combiners, power supplies, etc.);
peripherals (batteries, chargers, microphones, etc.); antennas; alarm reporting;
radio frequency (RF) Equipment; multiplex Equipment; interfaces;

 

  (E) Provide reasonable support for premises wireless phones that Health Net
deploys as a future capability;

 

  (ix) Responsibility for the deployment and on-going support of soft phones
that emulate a desk phone on a desktop/workstation;

 

  (x) Dialing plans:

 

  (A) Support Health Net’s desire to keep its numbering scheme and the ability
to accommodate expected growth; and

 

  (B) Support and operate internal dialing plans.

 

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  (xi) Toll fraud:

 

  (A) To the extent the Voice Network is capable (either in its existing form or
via configuration changes or other similar modifications other than Equipment
and Software upgrades), disallow third-party billing and collect calls to Health
Net lines in order to prevent toll fraud;

 

  (B) To the extent the Voice Network is capable (either in its existing form or
via configuration changes or other similar modifications other than Equipment
and Software upgrades), disallow remote access to second (PBX) dial tone;

 

  (C) To the extent the Voice Network is capable (either in its existing form or
via configuration changes or other similar modifications other than Equipment
and Software upgrades), disallow out-dialing to PSTN from Voice Mail ports;

 

  (D) Toll fraud management services and report abuses to Health Net contacts;
and

 

  (E) Work with third party toll fraud service providers.

 

  (xii) Telephone calling cards for travelers and on-call personnel:

 

  (A) Issued as requested by Health Net designated users without any additional
cost to Health Net;

 

  (B) Cards are tied to the authorized user’s assigned name, employee number, &
cost center code; and

 

  (C) Unmarked “generic” cards for use by undercover personnel.

 

  (xiii) To the extent the Voice Network is capable (either in its existing form
or via configuration changes or other similar modifications other than Equipment
and Software upgrades), Music on hold (MOH) capabilities:

 

  (A) Daily verification that MOH is operational on both systems and to verify
the volume is acceptable;

 

  (B) Replace UTC PBX port/card as required;

 

  (C) Adjust volumes as required;

 

  (D) Seasonal channel selections;

 

  (E) Integrated recording services solutions; and

 

  (F) Multiple on-hold, on-queue wait time sources per site for recording
services (e.g., music on hold, announcements on hold, music and custom
announcements during wait times in queues, etc.).

 

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  (xiv) Call recording to the extent the Voice Network is capable (either in its
existing form or via configuration changes or other similar modifications other
than Equipment and Software upgrades):

 

  (A) Integrated recording services solutions;

 

  (B) Multiple on-hold, on-queue wait time sources per site for recording
services (e.g., music on hold, announcements on hold, music and custom
announcements during wait times in queues, etc.);

 

  (C) The capability for searching for the unique call identifier (or Authorized
User ID) to locate and review the actual recorded voice call;

 

  (D) Adaptive voice telecommunications services and Equipment as required by
laws affecting the support of the disabled; and

 

  (E) Voice recognition auto attendant – Simple “yes”, “no” type of services.

 

  5.7 Long Distance Service.

 

  (a) Supplier shall perform the Functions necessary to provide authorized
Health Net Service Recipients with intrastate, interstate, and international
calling from Health Net’s business locations (the “Long Distance Services”).
Long Distance Services include the planning and assessment, implementation, and
ongoing management necessary to deploy Long Distance Services enterprise wide.
Long distance calls are those that terminate at locations outside the caller’s
local calling area to locations in the United States (domestic) and to foreign
countries (international).

 

  (b) Functional Requirements. As part of the Long Distance Services, Supplier
shall provide and make available to Health the following functionality:

 

  (i) Unlimited domestic long distance;

 

  (ii) Ability for Health Net-approved Service Recipients to access the Long
Distance Services

 

  (iii) To the extent the Voice Network is capable (either in its existing form
or via configuration changes or other similar modifications other than Equipment
and Software upgrades), the capability to restrict access to selected NPAs and
NPA-NXXs if so directed by Health Net designated users, through the carrier and
secondarily through the PBX.

 

  (iv) To the extent the Voice Network is capable (either in its existing form
or via configuration changes or other similar modifications other than Equipment
and Software upgrades), the ability to block access to “call completion”
services offered in conjunction with directory assistance calls.

 

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  (v) Access to long distance directory assistance services (i.e., “555-1212”)
24x7.

 

  (vi) In accordance with LEC/Carrier contract specifications, provide
LEC/Carrier operator assistance services 24x7.

 

  (vii) To the extent the Voice Network is capable (either in its existing form
or via configuration changes or other similar modifications other than Equipment
and Software upgrades), the quality of all calls will be “toll” quality, as is
currently received by Health Net.

 

  (viii) To the extent the Voice Network is capable (either in its existing form
or via configuration changes or other similar modifications other than Equipment
and Software upgrades), provide least cost routing services; and

 

  (ix) To the extent the Voice Network is capable (either in its existing form
or via configuration changes or other similar modifications other than Equipment
and Software upgrades) provide alternate routing for each incoming and outgoing
service.

 

  (c) Operational Requirements. As part of the Long Distance Services, Supplier
shall perform the following operational Long Distance Services to the extent the
Voice Network is capable (either in its existing form or via configuration
changes or other similar modifications other than Equipment and Software
upgrades):

 

  (i) Establish a process to prevent inappropriate toll charges are billed to
Health Net;

 

  (ii) Within the capability of the Voice Network and systems, provide fraud
prevention service at the desk phone, PBX level, and LD carrier level;

 

  (iii) To the extent the Voice Network is capable (either in its existing form
or via configuration changes or other similar modifications other than Equipment
and Software upgrades), provide a mechanism for Health Net and business units
to, at their option, utilize an authorization and account code system to manage
telephone calls and costs, and calling card information, including the
following:

 

  (A) Assign and manage authorization codes as requested by Health Net and
business units and allow a system that will allow Health Net to administer the
system including making changes to the assignment, authorization codes, etc.;

 

  (B) Administrate authorization and account codes according to Health Net
information security policies, and as the policies change over time;

 

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  (C) Within the security policies of Health Net, use industry-standard and
Health Net approved security processes to allow designated users to:

 

  •  

Inquire about forgotten authorization codes and/or account numbers;

 

  •  

Reset a passwords; and

 

  •  

Obtain forgotten account codes.

 

  (D) Coordinate with the third party support centers for PBX Site Problem
Detection & Monitoring.

 

  5.8 Voice Mail Service.

 

  (a) Supplier shall provide the Equipment and administration necessary to allow
the efficient exchange of messages between two or more people by voice mailboxes
enterprise wide (the “Voice Mail Services”). The Voice Mail Services consists of
voice mail Equipment and features that are scalable for any size of business.

 

  (b) Functional Requirements. As part of the Voice Mail Services, Supplier
shall provide and make available to Health Net the following functionality:

 

  (i) To the extent the Voice Network is capable (either in its existing form or
via configuration changes or other similar modifications other than Equipment
and Software upgrades), the following provides a partial list of the voice mail
features that are available at existing and emerging integrated voice messaging
solutions:

 

  (A) Message notification;

 

  (B) Automated attendant;

 

  (C) Voice forms;

 

  (D) Bulletin boards;

 

  (E) Broadcast message(s);

 

  (F) Time-of-day controls;

 

  (G) Individual boxes per user;

 

  (H) Remote accessibility; and

 

  (I) Pager notification.

 

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  (ii) Systems to allow voice messaging interchange between all Health Net
systems; and

 

  (iii) Voice messaging services that can be remotely accessed.

 

  (c) Operational Requirements. As part of the Voice Mail Services, Supplier
shall perform the following operational Voice Mail Services:

 

  (i) Mailbox moves, adds and changes;

 

  (ii) Program all mailboxes for internal and external employees;

 

  (iii) Maintain current node addresses;

 

  (iv) Manually perform time change;

 

  (v) Switch power supply during time change process;

 

  (vi) Provide daily preventative maintenance;

 

  (vii) Provide Software support;

 

  (viii) Program distribution lists;

 

  (ix) Record and distribute broadcast messaging;

 

  (x) Record and distribute bulletin messaging;

 

  (xi) Provide current roster of users monthly to telecom personnel for a quick
reference listing of programmed voice mailboxes and the users/Applications
assigned to them;

 

  (xii) Monitor and manage disk space availability;

 

  (xiii) System error detection and resolution – levels 1, 2, & 3

 

  (xiv) Monitor and manage availability of all voice mail agents;

 

  (xv) Coordinate with PBX or key systems or third party vendors to verify
system back-ups are accurate and complete;

 

  (xvi) Monitor port availability and disk space;

 

  (xvii)  Maintain disaster recovery announcement for employee and customer
mailboxes;

 

  (xviii)  Provide new hire training material;

 

  (xix)  Update and maintain auto attendant and attendance schedule;

 

  (xx)  Manage timely deletion of terminated employees (i.e. lockout of
mailbox);

 

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  (xxi)  Manage Interface with Remote sites to establish current node addresses;

 

  (xxii)  Manage Software/hardware upgrade(s);

 

  (xxiii)  Manage various classes of service (management class of service) by
business unit and location;

 

  (xxiv)  Ticket and vendor management;

 

  (xxv)  Activate and confirm continued activation of authorized mailboxes;

 

  (xxvi)  Create and design topologies to implement special Software (auto
attendant, transfer mailboxes, caller’s menu, listen only); and

(xxvii)  Manage ability to change/restore password.

 

  5.9 Online Directory Service.

 

  (a) Supplier shall provide those Services necessary to support the retrieval,
access and data compilation of user directory information in support of Health
Net telephone users communication information and tools (the “Online Directory
Services”).

 

  (b) Functional Requirements. As part of the Online Directory Services,
Supplier shall provide those services necessary to support the retrieval, access
and data compilation of user directory information supporting the Health Net
online directory service that is designed to provide real or near real time
updates of Health Net personnel, FAX numbers and other information in accordance
with the following:

 

  (i) To the extent the data is available in the data repository Supplier will
facilitate the compilation of such online directory including a listing of all
Health Net personnel, searchable by employee names, contractor names, and
on-site vendor names and their email addresses, Health Net and its Affiliates
office addresses and telephone numbers, department FAX numbers, conference room
telephone numbers, video rooms, and major department listing, accessible on a
secure, network-accessible channel (intranet) for querying and reporting; and

 

  (ii) Supplier shall provide compilation between the Health Net Intranet online
telephone directory and the Health Net telecom system to increase efficiency of
call accounting.

 

  (c) Operational Requirements. As part of the Online Directory Services,
Supplier shall perform the following operational services:

 

  (i) Supplier shall maintain secure access to the online directory to all
Health Net employees from the Health Net Intranet using standard browsers and
support Software and process automation needs.

 

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  (ii) Supplier shall, update the directory to reflect adds/ moves/ changes/
deletions by utilizing the LDAP connector to PeopleSoft or other connecting
services as approved by Health Net; and

 

  (iii) Perform monthly checks of the online directory for employee, contractor
and vendors to confirm data integrity.

 

  5.10 Teleconferencing Service.

 

  (a) To the extent the collaboration tool allows, Supplier shall provide (and
to the extent the collaboration tool is not capable of providing, Supplier shall
coordinate with external vendors to provide) Health Net phone users with
conference participation capabilities in which individuals in remote locations
communicate simultaneously using telephone lines (the “Teleconferencing
Service”).

 

  (i) Teleconferencing Services shall be provided both with respect to the
internal Cisco MeetingPlace platform and the external suppliers.

 

  (ii) Teleconferencing Services also include the planning and assessment,
implementation, training as described in Section 2.18 of this Schedule A
(Services), and ongoing management necessary to implement an audio conferencing
service. An array of features will be supported on a call-by-call basis with the
delivered services. Coordination with existing vendors will be required.

 

  (b) The Teleconferencing Service shall be available twenty four hours per day,
seven days per week.

 

  (c) Functional Requirements. Supplier provide the following Teleconferencing
Services functionality:

 

  (i) Local, intrastate, national and international voice teleconferencing;

 

  (ii) Features that include polling and voting, faxing, recording replaying,
broadcast, and attendant type services and transcription on a menu basis;

 

  (iii) All types of audio conferencing, such as meet-me, operator-assisted, and
operator-dialed;

 

  (iv) On-demand and prescheduled teleconferences;

 

  (v) Additional enhanced services, including:

 

  (A) Conference operator callback; and

 

  (B) Monitoring/recording.

 

  (vi) Confirmation of teleconference prior to the call;

 

  (vii) Corporate service offer call options include:

 

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  (A) Reserved caller paid dial in;

 

  (B) Reservation less caller paid dial in;

 

  (C) Reserved 800 dial in;

 

  (D) Reservation less 800 dial In;

 

  (E) Reserved mixed mode or combination of caller paid dial in and 800 dial in;
and

 

  (F) Reservation less mixed mode or combination of caller paid dial in and 800
dial in.

 

  (viii) On-demand and prescheduled teleconferences with automatic port
expansion;

 

  (ix) Reserved calls function;

 

  (x) Reservationless calls function;

 

  (xi) Executive/Premier services for additional charges, including:

 

  (A) Enhanced services and features;

 

  (B) Monitoring/recording;

 

  (C) Transcription; and

 

  (D) All executive calls are hosted on external conferencing provider.

 

  (d) Operational Requirements. As part of the Teleconferencing Services,
Supplier shall perform the following operational services:

 

  (i) Manage vendor provided service; and

 

  (ii) Assign and maintain Reservation less accounts.

 

  5.11 Inbound Toll Free / Call Center Service.

 

  (a) To the extent the Voice Network is capable (either in its existing form or
via configuration changes or other similar modifications other than Equipment
and Software upgrades), Supplier shall provide Health Net-approved Service
Recipients with toll-free services that allows intrastate, interstate, and
access to Health Net’s business locations (the “Inbound Toll Free / Call Center
Service”). Inbound Toll-Free / Call Center Services consist of planning and
assessment, implementation, and ongoing management necessary to deploy toll-free
service enterprise wide.

 

  (b) Functional Requirements.

 

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  (i) Supplier shall provide technical support for dedicated digital and PRI
(T-1 & T-3) and/or switched access (800 inbound, POTS, Combo, DID, DOD, etc)
circuits / trunks. Supplier shall keep records on connections to all PBXs such
as which trunk groups and Software support each internal customer/department.

 

  (ii) Supplier shall create and maintain documentation to track vendor
circuits, trunk groups, protocols, DNIS assignments and terminations and all
other related information.

 

  (iii) Supplier shall provide training as described in Section 2.18 of this
Schedule A (Services) and other support to Health Net technical and business
unit employees for toll-free routing changes that are available during
emergencies and other events that require call routing changes. Toll-free
routing changes can include area code based routing, intrastate, interstate, and
international routings. Supplier shall track the various Software activities and
provide reports.

 

  (iv) Supplier shall also provide the following functionality requirements to
the extent the Voice Network is capable (either in its existing form or via
configuration changes or other similar modifications other than Equipment and
Software upgrades):

 

  (A) Support for dedicated digital and/or traditional voice-grade communication
systems.

 

  (B) Blocking calls from selected numbering plan areas (NPAs) and NPA/NXX
combinations as requested within required timeframe.

 

  (C) Offering multiple levels of originating locations, including selected
NPA-NXX combinations, only intra-state calling, and calling from all domestic
locations.

 

  (D) Advanced features for routing.

 

  (E) Real time call reporting and historical reporting.

 

  (F) Coordinate selective routing which can include area code based routing,
intrastate, interstate, and international routing restrictions. and

 

  (G) Work with Health Net business units to develop and implement toll-free
service as required.

 

  (c) Operational Requirements.

 

  (i)

Supplier shall coordinate with End Users to fulfill requests concerning
toll-free services including new orders, cancellations, moves, adds and changes
(MAC’s). Supplier shall be responsible for providing and

 

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managing toll-free numbers to be used by Health Net, which may include advanced
features.

 

  (ii) Supplier shall utilize industry standard tools, to create the call
routing plans required by Health Net. The plans shall include input menus, call
prompters, announcements, alternate routing paths, and load-balance routing
between sites and special day (holiday) routings. Elements of these plans may be
defined entirely within the carrier network, entirely within the ACD, or as a
hybrid, with portions of the overall plan defined in both the carrier network
and the ACD and working seamlessly together. Supplier shall submit a written
service request to the carrier for all termination requirements, recorded
phrases, call-origination restrictions, and other services related to routing
plans.

 

  (iii) Supplier shall create, schedule, establish and maintain carrier
historical reporting for End Users departments.

 

  (iv) Supplier shall also perform the following additional operational
services:

 

  (A) Coordinate and implement service request for inbound service with carrier;

 

  (B) Monitor and manage toll-free numbers and related service, which may
include advanced routing features;

 

  (C) Document and make available termination points(s) within each affected
Health Net site, which can include T1, inbound trunk, contact-center Equipment,
voicemail, IVR, and station Equipment;

 

  (D) Create and maintain the call routing plans required by Health Net. The
plans may include input menus, call prompters, announcements, alternate routing
paths, and load-balance routing between sites;

 

  (E) Provide soft copy of all routing plans to Health Net quarterly. Major
modifications shall be provided upon project implementation;

 

  (F) Request and maintain all termination requirements, recorded phrases,
call-origination restrictions, and other pertinent information necessary to
create the routing plans or to modify them; and

 

  (G) Establish and maintain real time call information and historical reporting
for End Users.

 

  5.12 Automated Call Distribution (ACD) Service.

 

  (a)

Supplier shall plan for, assess, implement, and manage voice features on
telephone switches for handling large volumes of incoming calls for

 

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numerous call center and help desk requirements (the “Automated Call
Distribution (ACD) Services”). Health Net answering ACD agents can use the
functions of ACD with the multi line telephone sets identified in the
attachments.

 

  (b) Functional Requirements. As part of the ACD Services and to the extent the
Voice Network is capable (either in its existing form or via configuration
changes or other similar modifications other than Equipment and Software
upgrades), Supplier shall provide the following Automated Call Distribution
Services functionality:

 

  (i) Multiple queue assignment;

 

  (ii) Virtual log-on;

 

  (iii) Skill based routing;

 

  (iv) Walk away;

 

  (v) Performance reporting;

 

  (vi) Configuration control;

 

  (vii) Agent monitoring/recording;

 

  (viii) Whisper;

 

  (ix) Recorded announcement(s);

 

  (x) Queue overflow;

 

  (xi) Music on hold;

 

  (xii) Support wired and wireless headsets, including registering IP phones
with network, configuring workstations to phones; ad-hoc wireless & wired
headsets;

 

  (xiii) Ability to print to files for the reports;

 

  (xiv) Support for the interface between the ACD and the reader-boards;

 

  (xv) Quality monitoring functionality that provides the ability for a Supplier
manager or Health Net to listen to calls (in real time or recorded), including
as a means of validating the call center agents are following procedures; and

 

  (xvi) Workforce scheduling functionality that provides the capability for call
center management and control functions to better schedule the appropriate
number of agents in order to meet the projected call volumes.

 

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  (c) Operational Requirements. As part of the ACD Services, Supplier shall
provide the following operational services:

 

  (i) Provide ACD report interpretation and assist with report setup and
generation;

 

  (ii) Install ACD related client Software on supervisor PC;

 

  (iii) Design queues and implement customized call flow;

 

  (iv) Manage and maintain agent/queues, including by making changes to such
queues. Supplier shall recommend to Health Net agent/queues moves, adds and
changes. Supplier shall implement any such moves, adds or changes approved by
Health Net.

 

  (v) Supplier shall provide capacity management and monitoring services related
to desktop access to the ACD (e.g., balancing loads across the ACD Ethernet
ports);

 

  (vi) Design all queues based on customer requirements that provide agent
mobility;

 

  (vii) Provide call flow and queue design documentation to each business unit;

 

  (viii) Provide system administration and level-one troubleshooting;

 

  (ix) Perform daily preventative maintenance;

 

  (x) Deploy and manage Equipment and Software upgrades and/or feature
enhancements;

 

  (xi) Provide consultation to contact center owners in developing new or
modifying existing ACD Software; and

 

  (xii) Work in conjunction with support vendor, when necessary, to design and
implement ACD Software.

 

  5.13 Integrated Voice Response (IVR) Service.

 

  (a) Supplier shall provide ACD trunking (talk-path and signaling channel)
Services to Health Net and Health Net’s business partners.

 

  (b) Operational Requirements. As part of the IVR Services, Supplier shall
perform the following operational Services, to the extent the Voice Network is
capable (either in its existing form or via configuration changes or other
similar modifications other than Equipment and Software upgrades):

 

  (i) Perform daily monitoring and maintenance function;

 

  (ii) Monitor call volume;

 

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  (iii) Monitor ACD agent ports for enabled status; and

 

  (iv) Coordinate IVR transfer with ACD port availability.

 

  (c) Management & Reporting Requirements. As part of the IVR Services, Supplier
will collaborate all monitoring, planning, operations and support as required by
Health Net with the IVR vendor, including by reviewing operational reports to
confirm Service Levels are being met.

 

  5.14 Video Conference Service.

 

  (a) Supplier shall provide Health Net approved Service Recipients with a
reservations-based service that allows multiple sites to join the same
prescheduled video conference call (“Video Conference Services”). Video
Conference Services shall allow people at two or more locations to see and hear
each other at the same time. Calls may be scheduled up to one year in advance
and video conferences may occur anytime — 24 hours a day, 7 days a week. Video
Conference Services will include monitoring of all video network traffic
originating from Health Net. Transmission facilities include private circuits,
virtual lines, and dial-up. Supplier shall provide moves, adds, changes,
installation, de-installation, and upgrades of the Equipment, (e.g., circuits,
cabling) and Software. Supplier will also provide user support to interface with
users making or changing video reservations, as well as providing ad-hoc
training for users unfamiliar with the video conferencing system as described in
Section 2.18 of this Schedule A (Services).

 

  (b) Functional Requirements. As part of the Video Conference Services,
Supplier shall provide the following functionality:

 

  (i) Point to point and multi-point calls;

 

  (ii) Features such as PowerPoint and laptop presentations, electronic
whiteboard integration, document camera, and VCR presentations;

 

  (iii) Teleconferencing integration;

 

  (iv) Vendor support for bridging multi-point calls;

 

  (v) Remote ISDN connections; and

 

  (vi) Enterprise planning.

 

  (c) Operational Requirements. As part of the Video Conference Services,
Supplier shall perform the following operational services:

 

  (i) Connect and maintain all point to point and multi-point video conference
calls;

 

  (ii) Provide support for laptop and VCR presentations, electronic whiteboard
and document camera integration into video conference (see site inventory);

 

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  (iii) Integrate teleconference requests into video conference meetings;

 

  (iv) Monitor calls, support calls while in progress;

 

  (v) Provide coordination of vendor bridging for all multi-point calls;

 

  (vi) Perform all Equipment and Software upgrades;

 

  (vii) Schedule hardware and Software upgrades;

 

  (viii) Maintain video conference calendar and scheduling;

 

  (ix) Video room calendar maintenance and scheduling; and

 

  (x) Video room clock coordination.

 

  5.15 Web Conference Services.

Web conferencing Services are those Functions associated with the provision,
support and maintenance of both internal (e.g., netmeeting/live meeting service)
and external web-hosted services that allow authorized users to share
Applications, presentations, documents, web browsers and desktops in real-time
by accessing a web browser, this allowing online meetings to held from any
computer with a network connection. Supplier shall provide the web conferencing
Services, which shall include the following functionality:

 

  (a) Ability to start a meeting, invite participants, demonstrate products, and
annotate documents.

 

  (b) Ability to demonstrate presentation material, highlight and review
documentation;

 

  (c) Ability to view, annotate or edit documents in real-time and conduct
spontaneous question and answer sessions. This allows real-time collaboration on
presentation material and communication via the internet.

 

6. END USER SERVICES

 

  (a) “End User Services” means those Functions related to the support of End
User Resources. End User Services includes (i) those services, Functions and
responsibilities described in this Section 6, and (ii) the O&M Services and the
Enterprise Security Management Services, each as they apply to the Functions,
Equipment, Software, process, or other activities described in this Section 6.

 

  (b) “End User Resources” means End User Equipment and Software, including:

 

  (i) Desktop Equipment, including both networked and non-networked (e.g.,
standalone networked machines) Equipment;

 

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  (ii) PC or Macintosh systems (e.g., desktop, tower, workstation, laptop, and
mobile computing devices);

 

  (iii) Workstation monitors;

 

  (iv) Telephones, including IP phones, wireless and wired headsets and
handsets;

 

  (v) Peripheral devices (e.g., printers scanners, media libraries);

 

  (vi) Portable computing devices such as laptop computers, Blackberries, and
Personal Digital Assistants (PDAs);

 

  (vii) Desktop Software, including operating systems, office automation
Applications, Software suites, and utilities that provide functionality to the
above mentioned hardware resources; and

 

  (viii) Network interface cards (NIC) and adapters.

 

  (c) Notwithstanding anything to the contrary in this Section 6, with respect
to Macintosh systems, Supplier shall perform the Services described in this
section using reasonably best efforts.

 

  6.2 General Obligations.

 

  (a) Supplier is responsible for performing the general End User Services
described below that are identified as Supplier’s responsibility:

 

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Table 37. End User Services Capabilities Roles and Responsibilities

 

End User Services Capabilities Roles and Responsibilities

   Supplier    Health Net

1.      Define desktop/End User capability requirements outlined in this
section.

      X

2.      Define services and standards for supporting the desktop/End User
capabilities.

   X   

3.      Participate in defining and approve services and standards for
supporting the desktop/End User capabilities.

      X

4.      Provide support for desktop standard configurations.

   X   

5.      Provide installations/removals and break-fix for all End User Resources.

   X   

6.      Provide personal productivity services (e.g. PDA support) and office
automation services, including setup, proper use, troubleshooting & RMAs for
devices.

   X   

7.      Provide support services for standard desktop Applications, including
assisting in installation per standard configuration as well as troubleshooting.

   X   

8.      Where there is a network wall jack installed in reasonably close
proximity, connect workstations to such network wall jack and troubleshoot any
issues related to connectivity (including by identifying for Health Net any
in-wall cabling issues and at Health Net’s request, coordinating the resolution
of such in-wall cabling issues).

   X   

 

  (b) In addition, Supplier shall perform the following activities:

 

  (i) Desktops

 

  (A) Image, configure and set up workstations;

 

  (B) Remotely diagnose Equipment and Software Incidents and Problems and
resolve such Incidents and Problems in accordance with Section 2.9 (Incident and
Problem Management);

 

  (C) Resolve issues connecting/printing or mapping to networked printers on
PCs;

 

  (D) Adjust and resolve issues with display properties, including screen
resolution, color depth and Refresh rates; and

 

  (E) Perform hardware upgrades.

 

  (ii) Laptops

 

  (A) Image, configure and set up Laptops;

 

  (B) Assist with remote access issues related to broadband or dial-up;

 

  (C) Assist remote access users with accessing a variety of applications at
various locations in different environments;

 

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  (D) Support/troubleshoot issues with locally installed applications (standard
and non standard);

 

  (E) Verify that all Equipment is functional and resolve issues in accordance
with Section 2.9(Incident and Problem Management) (including issues related to
modems, port replicators, PC cards etc.);

 

  (F) Confirm enterprise-wide updates/patches are installed on laptops; and

 

  (G) Perform hardware upgrades.

 

  6.3 Printer Support Services.

With respect to printers, Supplier is responsible for performing the activities
described below that are identified as Supplier responsibility:

 

    

Printer Support Requirements

   Supplier    Health Net

1

   Printer queue creation.    X   

2

   Printer queue maintenance.    X   

3

   Install/de-install single user printer.    X   

4

   Install/deinstall small department printer.    X   

5

   Install/de-install single user multi-function device.    X   

6

   Install/de-install small department multi-function device.    X   

7

   Perform remote trouble-shooting of printer-related Incidents and Problems
where possible; otherwise coordinate the dispatch of a printer maintenance
technician to resolve the issue.    X   

8

   Printer Equipment repair.       X

9

   Configure End User workstation to utilize printer.    X   

10

   Provide support for the installation of print drivers for End User.    X   

11

   Map printers for End Users.    X   

13

   Coordinate the installation of large, networked, multi-function device,
including by notifying Health Net of installation schedules and making sure the
location has proper network connectivity access.    X   

14

   Validate network connection available and in working order for printer
installations.    X   

 

  6.4 PDA Support Services.

 

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PDA Services means those Functions associated with the installation and support
of PDA devices for Service Recipients. Supplier will provide PDA Services
including,

 

  (a) Setting up a new PDA for a Service Recipient.

 

  (b) Installing and supporting “Standard” Features (including links and
applications). “Standard” features mean those features that Health Net provides
as a standard package to its employees, which Health net may change from time to
time.

 

  (c) Support roll-out of Health Net developed or acquired creating custom
objects, applications or links.

 

  (d) Responding to queries on how to use the features on the device.

 

  (e) Password resets.

 

  (f) Set-up of a new PDA, e.g. activations.

 

  (g) Troubleshooting of performance issues.

 

  (h) Responding to area coverage concerns of End Users (e.g., by recommending
PDA vendors based on locale of the End User).

 

  (i) Coordinating porting or transferring of phone numbers from one device to
another.

 

  (j) Coordinating the issuance and upgrade of devices.

 

  (k) Voice support.

 

  (l) Training and/or use of the device.

 

  (m) Install PDA to desktop and/or laptops; and

 

  (n) Resolve all issues related to synchronizing PDA software.

 

  6.5 Software Deployment and Management Services.

 

  (a) Software deployment and management Services are those Functions associated
with the provision and/or development of technical infrastructure tools and
utilities that enhance Software solutions (including custom and third party
solutions) operating in the End User Services environment, including:

 

  (i) Creating and maintaining standard images for Health Net End User
desktop/workstation configurations;

 

  (ii) Creating and maintaining builds for standard Health Net distributed
Applications;

 

  (iii) Providing and administering a Software distribution facility;

 

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  (iv) Recreating End User desktop/workstation environment to the applicable
standard image (exclusive of End User data), including base build plus all End
User specific features, functions and Applications;

 

  (v) Creating and maintaining the presentation of desktop Application shortcuts
based on a defined user group security;

 

  (vi) Developing, implementing, and maintaining scripts to automate standard
Health Net End User device processes; and

 

  (vii) Developing, implementing, and maintaining macro programs for Health Net
standard End User Applications and processes.

 

  (b) Supplier shall perform the Software deployment and management Services,
including those Functions listed in the roles and responsibilities table below,
except for those Functions that are expressly identified as retained Health Net
responsibilities in the roles and responsibilities table below.

Table 38. Software Deployment/Management Roles and Responsibilities

 

Software Deployment/Management Roles and Responsibilities

   Supplier    Health Net

1.      Develop Software deployment/management policies and procedures.

   X   

2.      Participate in development Software deployment/management policies and
procedures.

      X

3.      Review and approve Software deployment/ management policies and
procedures and standard desktop images and configurations.

      X

4.      Maintain and confirm compliance with agreed-upon Software
deployment/management policies and procedures.

   X   

5.      Manage deployment efforts using formal project management tools and
methodologies.

   X   

6.      Conduct development reviews and provide results to Health Net.

   X   

7.      Create standard Health Net infrastructure images specific to IT service
area (e.g., desktop images for End Users).

   X   

8.      Provide and administer a Software distribution facility.

   X   

9.      Develop scripts and macro programs to automate standard Health Net
processes as appropriate (e.g., upgrading desktop images).

   X   

 

  6.6 Implementation and Migration.

Supplier shall perform the following implementation and migration Services:

 

  (a) Performing installations, changes and other related activities associated
with the installation of new Software components, including commercial and
custom developed Applications, Software suites and utilities that impact an End
User’s Equipment, peripherals or desktop Software or configurations;

 

  (b) Performing End User Software upgrades, including as a result of new and
enhanced Applications and architectures; and

 

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  (c) Installing new or enhanced End User Resources attached to the LAN,
including installing Software on LAN-connected PCs or Macintosh workstations;
and

 

  (d) Installing wiring and patch cords from distributed devices to a Network
wall jack using patch cords per Health Net’s standards that do not cause the
degradation of network performance.

 

  6.7 Operations and Administration.

 

  (a) Supplier shall perform the following implementation and migration
Services:

 

  (i) Operations for centralized and remote desktops/workstations, laptop
computers and servers, including:

 

  (A) Providing data storage, as well as access to data residing in a
centralized repository (e.g., data located on file servers);

 

  (B) Providing data backup and recovery capability for personal and
organizational data stores located on Health Net file servers;

 

  (C) Providing controls, access, and management services for End User
Resources;

 

  (D) Providing technical support for Service Recipients performing activities
associated with the development and control of local databases used for
Applications, (e.g., database development, storage and access support);

 

  (E) Providing the common suite of centralized Health Net- desktop/workstation
tools (as identified in the Procedures Manual) that will allow users to produce,
communicate and function within Health Net’s systems environment. These common
tools include, as of the Effective Date, a standard office automation suite,
e-mail, calendaring, news service access and display, Web browser, and
collaboration and document sharing, wireless access to local wireless network;

 

  (F) Providing feedback to Health Net as to whether Health Net’s current
standards, policies and procedures are effective in achieving the desired
results, and proposing recommendations to enhance those standards, policies and
procedures;

 

  (G) Performing and supporting hardware and Software IMACs, re-installations,
updates and downloads;

 

  (H) Performing data or Software migration necessary due to any Equipment or
Software IMACs and re-installations; and

 

  (I) Provide tools and services to monitor and prevent receipt of e-mail spam.

 

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  (ii) Administration activities, including managing user accounts, disk space
quotas and access control (OS, database, Middleware, file systems, disk space,
etc.).

 

  (b) Supplier will also perform the following operations and administration
Functions, other than those expressly identified as retained Health Net
responsibilities:

Table 39. Operations and Administration Roles and Responsibilities

 

Operations and Administration Roles and Responsibilities

   Supplier    Health Net

1.      Provide input processing support for activities such as loading media,
receiving batch electronic file transmissions, etc.

   X   

2.      Provide support for local databases used for local Applications.

   X   

3.      Provide centralized, yet separate Internet, intranet, and extranet Web
access, hosting, and server services for Web pages, Applications and electronic
commerce.

   X   

4.      Perform LAN/wireless LAN/Domain/OS administration support activities for
all listed managed servers, which includes, but is not limited to, IP
addressing, file and print sharing, logon user-id and password maintenance, etc.

   X   

5.      Provide and utilize the tools listed in Schedule J (Software), as such
tools may change and evolve in accordance with the Agreement, to monitor and
prevent receipt of e-mail spam.

   X   

6.      Mount and remove tape volumes as needed.

   X   

7.      Maintain a tape library, tape management system and transport tapes to
production area as needed.

   X   

8.      Define End User Equipment, Software and data backup/recovery
requirements.

      X

9.      Define End User file/database ownership and retention requirements.

      X

10.    Install paper/forms for printers.

      X

11.    Remove desktop/End User device print jobs and place in output bins,
courier and/or mail as instructed.

      X

12.    Distribute desktop/End User device print jobs to user locations.

      X

13.    Define requirements for automated output distribution to End Users.

      X

14.    Maintain automated output distribution tables.

   X   

15.    Provide desktop End User network Support for designated third parties.

   X   

16.    Provide desktop email support services, including creating and modifying
email access.

   X   

 

  6.8 Configuration Management/Change Control.

Supplier shall perform the following configuration management and change control
Services:

 

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  (a) Establish Change requirements, including for PC/Macintosh, workstation,
operating system, Applications, user access; and

 

  (b) Work with Health Net to establish desktop/workstation requirements and
impact of Changes.

 

  6.9 Repair Services.

Supplier is responsible for performing break/fix, repair, and/or maintenance
services for Equipment and Software; provided however that (i) Health Net shall
be Financially Responsible for maintaining warranty and/or maintenance coverage
(e.g., through a third party maintenance contract) for Equipment for which
Health Net retains Financial Responsibility; and (ii) for such Equipment,
Supplier shall coordinate and manage through resolution all break/fix, repair,
and/or maintenance services through the applicable Health Net warranty and/or
maintenance provider. Such coordination Services include diagnosing the issue,
notifying the applicable warranty or maintenance provider that repair work is
required, placing and tracking orders for necessary repairs, coordinating the
delivery of the broken parts to such providers (as necessary) and, receiving and
installing replacement Equipment (provided however, that with respect to the
repair of End User Resources at Remote Health Net Facilities, if the applicable
warranty or maintenance contract does not provide for on site repair, Supplier
shall be responsible for coordinating the receipt of replacement Equipment by
the appropriate End User (and assist such End User remotely, if necessary,
during the installation of the such replacement Equipment)), and providing
updates on the status of the repairs in the Incident management system and to
the applicable End Users, as necessary.

 

  6.10 Custom Services.

Supplier will provide additional ad hoc services as necessary to support VIPs,
walk-in Service Recipients and Periodic Events. Such ad hoc services can include
installation/deployment, maintenance, support, break/fix, Software and other
technical training as described in Section 2.18 of this Schedule A (Services),
upgrades, etc.

 

  (a) “VIP” means an End User designated as a VIP by Health Net.

 

  (i) In addition to the standard End User Services, VIP support Services may
require Supplier to dispatch technicians to the VIP’s home or other remote
locations (e.g., hotel, conference center);

 

  (ii) Supplier shall perform VIP support Services for all VIPs, regardless of
their location. At the following Health Net Facilities, Supplier shall have at
least one (1) deskside support Supplier Personnel who is specifically trained to
and has the particular skills necessary to effectively and efficiently support
VIPs and who will have primary responsibility for performing the VIP support
Services for VIPs located at such Health Net Facilities: (1) Health Net
Headquarters at Woodland Hills, CA, (2) Health Net’s Shelton Facility, and
(3) Health Net’s Rancho Cordova Facility.

 

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  (iii) VIP support shall be performed using expedited escalation procedures and
Problems and Incidents involving a VIP will be treated as a Priority 1 Problem
or Incident as set forth in Exhibit B-3.

 

  (b) “Periodic Events” means a Health Net event that requires teleconferencing
support, network or internet only access or other support related to the
Services. Such Periodic Events may occur on average twice per month over a
rolling twelve month period. Examples of Periodic Events include town hall
meetings, board meetings, annual/quarterly VIP events, visits from non-Health
Net Auditors.

 

  (i) With respect to visits from non-Health Net auditors, Supplier will be
responsible for provisioning internet only for such auditors. Such requests
occur once or twice a month, and such visits may last several months in
duration.

 

  (ii) With respect to other general meetings and events, Supplier shall perform
the following:

 

  (A) Verify that meeting/event locations are properly equipped based on the
requirements for each meeting event;

 

  (B) Test and verify functionality of Equipment and “Internet-only” network
connectivity sufficiently in advance of the meeting/event to allow a reasonable
amount of time for rescheduling such meeting/event; and

 

  (C) Provide instruction to Health Net on the use of such Equipment
sufficiently in advance of the meeting/event.

 

7. HELP DESK SERVICES

 

  (a) “Help Desk Services” means those Functions related to the receipt,
tracking, response and resolution of Service Requests, Incidents, Problems or
other inquiries submitted to the help desk, including (i) Service Requests,
Incidents, Problems or other inquiries made by Service Recipients or other third
party vendors providing services for Health Net, and (ii) Service Requests,
Incidents, Problems or other inquiries about any aspect of Health Net’s IT
Infrastructure (e.g., operating systems, packaged Software or other Software,
network connectivity (voice and data), PC/Macintosh supplier, data center
operations, and End User Resources, or any other services described in this
Schedule A (Services). Help Desk Services includes (i) those Functions described
in this Section 7, and (ii) the O&M Services and the Enterprise Security
Management Services, as each may apply to the Functions, Equipment, Software,
process, or other activities described in this Section 7.

 

  7.2 General Obligations.

 

  (a) Supplier will provide the following general Help Desk Services:

 

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  (i) Provisioning a Single-Point-of-Contact (“SPOC”) for the logging, tracking,
reporting and resolution of IT Problems for Health Net End Users and end-to-end
ownership of all requests for service, including those that may need to be
referred/escalated to more specialized entities for resolution (whether that
entity is Health Net, a vendor or a designated third party). Supplier shall
comply with Health Net’s “Point of Contact Information Guide” as referenced in
Schedule O (Health Net Policies and Procedures), which reflects a process in
support of maintaining open lines of communication between Supplier and Health
Net business departments until an outage is resolved.

 

  (ii) Managing and supporting the root cause analysis process described in
Section 2.9, above; and

 

  (iii) Supplier shall provide the Help Desk Services in English.

 

  (b) Supplier shall make the ticketing system available to Health Net and other
Health Net service providers for Health Net tickets for Problem resolution
purposes.

 

  7.3 Planning & Analysis.

Supplier will perform the following planning and analysis Functions, other than
those expressly identified as retained Health Net responsibilities:

Table 40. Planning and Analysis Roles and Responsibilities

 

Planning and Analysis Roles and Responsibilities

   Supplier    Health
Net

1.       Perform operational planning for help desk capacity and performance
purposes and provide to Health Net for review.

   X   

2.       Identify and recommend help desk solution that best meets Health Net
business needs and expense/service–level expectations.

   X   

3.       Develop Problem escalation and Health Net reporting standards and
policies based on industry best practices.

   X   

4.       Review and approve Problem escalation and Health Net reporting
standards and policies.

      X

5.       Recommend standards and designs.

   X   

6.       Approve standards and designs.

      X

7.       Provide procedures and templates for new systems implementations.

   X   

8.       Complete procedures for new systems implementations.

   X   

9.       Provide timings and requirements for new system implementations.

   X   

10.     Review and approve timings and requirements for new system
implementations.

      X

11.     Implement new systems.

   X   

12.     Perform help desk capacity monitoring and planning.

   X   

 

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Planning and Analysis Roles and Responsibilities

   Supplier    Health
Net

13.    Design help desk layout.

   X   

14.    Install/test/maintain help desk facilities.

   X   

 

  7.4 Operations & Administration.

 

  (a) Supplier shall provide a SPOC for all Service Requests pertaining to, but
not necessarily limited to, the following:

 

  (i) Problem tracking and first-level resolution for all trouble calls,
including those related to desktop, Local-Area Network (LAN), data center,
Wide-Area Network (WAN), Software and phone switch availability requests.

 

  (ii) Facilities-related issues.

 

  (iii) IMACs, including all IMACs for distributed computing, network LAN and
WAN, voice and data center environments.

 

  (iv) “How-to” and Level 2 assistance for Health Net-defined commercial and
proprietary Software included in Health Net’s standard distributed computing
platform images (intermediate to expert user population).

 

  (v) Features, Functions and usage of shrink-wrapped Software. Examples of
shrink-wrapped Software include office suites, Web browsers, and anti-Virus
Software.

 

  (vi) Employee user account administration, activation, changes and
terminations in accordance with Health Net’s security policy, including:

 

  (A) Password/account setup and reset (various Health Net system platforms);

 

  (B) Remote access connectivity (for example, Virtual Private Network [VPN]);

 

  (C) E-mail accounts;

 

  (D) User IDs;

 

  (E) Password resets;

 

  (F) Voicemail administration;

 

  (G) Telephone lines;

 

  (H) PC/Macintosh; and

 

  (I) Desktop/workstations.

 

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  (vii) User account administration, including password resets.

 

  (b) Supplier shall provide two 800 Numbers, one for the Health Net Federal
Services and the other for rest of Health Net. Such 800 Numbers cannot change
during the Term.

HNFS Associates: 800.788.9593

All other Associates use 877.589.4357 (HELP). Supplier shall also:

 

  (i) Provide end to end ownership for:

 

  (A) Problem identification, escalation, resolution and closure; and

 

  (B) User change activity, including coordination with facilities, security and
telecommunications units.

 

  (ii) Record a random sampling of at least ten percent (10%) of all telephone
calls to the help desk.

 

  (iii) Execute all duties in accordance with Health Net’s security policies.

 

  (c) Supplier will also perform those Functions identified in the table below
as Supplier responsibility.

Table 41. Help Desk Administration Roles and Responsibilities

 

Help Desk Administration Roles and Responsibilities

   Supplier    Health
Net

1.       Staff and maintain a SPOC help desk for all Health Net End User
requests for assistance for all in-scope areas.

   X   

2.       Provide SPOC call-in access via a toll-free number for all in-scope
locations and business regions.

   X   

3.       Receive, track and answer Health Net employees and Health Nets calls.

   X   

4.       Provide help desk coverage 7 days/week, 24 hours/day, 365 days/year.

   X   

5.       Provide additional resources as needed during planned critical events.

   X   

6.       Track/manage/report help desk utilization.

   X   

7.       Track and report the number of abandoned calls and implement process to
minimize call abandonment.

   X   

8.       Provide escalation contact list(s).

      X

9.       Maintain escalation contact list(s).

   X   

10.     Select and implement Software (e.g., Problem management tool) and
Equipment (e.g. IVR) needed to collect, track and manage requests, inquiries,
Incidents and Problems for service received by the help desk.

   X   

11.     Maintain a continuous improvement program that improves help desk
services.

   X   

 

  7.5 Service Request and Trouble Ticket Management.

 

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  (a) Service request and trouble ticket management are those Functions
associated with tracking and managing to resolution all inquires, requests,
Incidents and Problems, including escalation to second-level specialists (e.g.,
Supplier resources, Health Net resources, or other third parties) through a
well-defined process; and

 

  (b) Supplier will also perform the following service request and trouble
ticket management Functions, other than those expressly identified as retained
Health Net responsibilities:

Table 42. Service Request and Trouble Ticket Management Roles and
Responsibilities

 

Service Request and Trouble Ticket Management Roles and Responsibilities

   Supplier    Health
Net

1.       Identify and describe priorities, response and resolution targets for
service calls and requests of differing impacts.

      X

2.       Develop procedures to receive and respond to Health Net calls for
service according to defined prioritization and resolution targets. Respond to
requests based on priority and impact (and not based on the method used to
notify the help desk of such request (e.g., telephone, email, direct input to
service request system by End Users, etc.)).

   X   

3.       Enter all inquires, requests, Incidents and Problems into trouble
ticketing system and categorize, and capture all relevant information in a
consistent format.

   X   

4.       Review and approve procedures to receive and respond to Health Net
calls.

      X

5.       Develop procedures for the escalation of Problems which cannot be
resolved without service dispatch.

   X   

6.       Review and approve procedures for the escalation of Problems.

      X

7.       Restore and/or resolve inquiry/Problem within prescribed time limits,
if possible, otherwise escalate to appropriate Level 2 or Level 3 resource.

   X   

8.       Identify Problem characteristics and, where possible, root cause.

   X   

9.       Monitor and respond to service request submitted via person-to-person,
e-mail, voice mail or Web access.

   X   

10.     Provide first point of contact for all service requests and Problem
notifications.

   X   

11.     Categorize, prioritize and log all IT inquiries/Problems/requests entry
into trouble ticket system.

   X   

12.     Determine Problem resolution requirements.

   X   

13.     Provide resolution within prescribed time limits for inquiries/Problems
which do not require service dispatch.

   X   

14.     Escalate Problem for field service dispatch or assign to other technical
support personnel as needed.

   X   

15.     Notify Health Net and vendor management as required.

   X   

16.     Issue broadcast messages regarding system status.

   X   

 

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Service Request and Trouble Ticket Management Roles and Responsibilities

   Supplier    Health
Net

17.     Approve methodology for issuing broadcast messages regarding system
status.

      X

18.     Design and implement self-help features that enable End Users to perform
preliminary Problem diagnosis and troubleshooting.

   X   

19.     Review and approve self-help process.

      X

20.     Monitor Problems until Problem resolution.

   X   

21.     Monitor and track in the ticket management system all trouble tickets to
closure, including by routing trouble tickets as necessary to appropriate
resolver groups; notify End Users of the status of all trouble tickets.

   X   

22.     Review recurring Incidents and Problems which meet defined criteria
using root cause analysis processes described in Section 2.9.

   X   

23.     Review knowledge base for ticket resolution system on a periodic basis.

      X

24.     Work internally and with other Supplier’s operational and technical
staffs, and Health Net, to identify solutions that minimize the need to call the
help desk.

   X   

25.     Approve solutions that minimize the need to call the help desk.

      X

 

  7.6 Remote Desktop Management.

 

  (a) Remote desktop management Services are those Functions associated with the
management of desktop devices and Software over the network, including
maintaining and troubleshooting the desktop, workstation and laptop operating
system and supported desktop/workstation/laptop Software from remote location or
mobile users to minimize the need to dispatch technical personnel. Examples of
Problems that are expected to be resolved using remote desktop management
Services include performing logical configurations changes, and updating files
such as drivers with more recent releases. Supplier shall also assist in
enabling the enforcement of compliance to standards and the appropriate
optimization at the desktop. This must be performed in accordance with Health
Net’s security policies.

 

  (b) Supplier shall perform the remote desktop management Services, including
those Functions listed in the roles and responsibilities table below, except for
those Functions that are expressly identified as retained Health Net
responsibilities in the roles and responsibilities table below.

Table 43. Remote Desktop Management Roles and Responsibilities

 

Remote Desktop Management Roles and Responsibilities

   Supplier    Health
Net

1.       Recommend and develop policies for the use of remote control tools for
maintenance and troubleshooting for network, data, voice/telecom issues.

   X   

2.       Review and approve policies for the use of remote control tools for
maintenance and troubleshooting.

      X

 

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Remote Desktop Management Roles and Responsibilities

   Supplier    Health
Net

3.       Recommend and develop plans and procedures for the use of remote
control tools in accordance with defined policies.

   X   

4.       Review and approve plans and procedures for the use of remote control
tools in accordance with defined policies.

      X

5.       Utilize remote controls in accordance with Health Net’s security
policies to diagnose and troubleshoot desktop device Problems from remote
locations.

   X   

6.       Utilize remote controls in accordance with Health Net’s security
policies to manage and update desktop Systems Software, and to maintain
inventory information.

   X   

7.       Utilize remote control tools in accordance with Health Net’s security
policies to manage and enforce compliance with standards.

   X   

8.       Diagnose the Problem and when possible implement corrective actions to
resolve the Problem. If resolution is not possible dispatch to the correct
support organization.

   X   

9.       Manage Incidents and Problems through to resolution.

   X   

10.     Document desktop system configuration, network configuration, and
inventory of Software to be supported.

   X   

 

  7.7 User Administration.

User administration Services are those Functions related to managing and
maintaining user accounts. Supplier shall perform the user administration
Services, including those Functions listed in the roles and responsibilities
table below, except for those Functions that are expressly identified as
retained Health Net responsibilities in the roles and responsibilities table
below.

Table 44. User Administration Services Roles and Responsibilities

 

User Administration Services Roles and Responsibilities

   Supplier    Health
Net

1.       Receive and track requests for user account activation, changes and
terminations.

   X   

2.       Create, change and delete user accounts in accordance with Health Net’s
security policies.

   X   

3.       Conduct account auditing, periodic review of access privileges in
accordance with Health Net policy.

   X   

4.       Reset passwords as required in accordance with Health Net’s security
policies.

   X   

5.       Review and approve all self-help and other capabilities with security
implications.

      X

 

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  7.8 Installs, Moves, Adds, Changes (IMACs).

Manage all the requests for modification to the Health Net environment. Install,
Move, add, and change (IMAC) requests to be routed to the help desk where the
support team gathers the business requirements, provides authorization, logs the
request, and facilitates fulfillment. All authorized IMAC requests are passed
automatically to the support team depending upon the location and the product or
service being requested.

 

  7.9 Self Help.

Self help Services means those Functions associated with the implementation,
maintenance, modification, and support of self service and other tools that
enable End Users to perform preliminary Problem diagnosis and troubleshooting,
submit various service requests (e.g., password resets) and minimize the need to
call the help desk (collectively, “Self Help Tools”). Self help Services include
the provision of out-of-prime time voice messaging with guaranteed callback
response, ability to enter trouble ticket, online guide for reference on
self-help (technical support, FAQs) & training as described in Section 2.18 of
this Schedule A (Services), and online support for PDAs (e.g., service
offerings, how to use). Supplier shall perform the self help Services, including
those Functions listed in the roles and responsibilities table below, except for
those Functions that are expressly identified as retained Health Net
responsibilities in the roles and responsibilities table below.

Table 45. Self Help Services Roles and Responsibilities

 

Self Help Roles and Responsibilities

   Supplier    Health
Net

1.       Implement and maintain the Self Help Tools listed designated as such in
Schedule J, as such tools may change and evolve over the Term in accordance with
the Agreement. Recommend to Health Net additional Self Help Tools that may
promote greater use of self help resources.

   X   

2.       Measure usefulness of the Self Help Tools and continually improve Self
Help Tools to maximize tool value.

   X   

3.       Review and approve improvements to the Self Help Tools.

      X

4.       Conduct Periodic reviews of the effectiveness of Self Help Tools’
capabilities and usage.

      X

 

  7.10 Meetings and Conferences.

Supplier shall perform the following services with respect to the support of
Health Net meetings and video and audio conferences (either video or telephone):

 

  (a) Setting up conference calls to go with the VTC meeting;

 

  (b) Reviewing the conference room schedules daily to find scheduled video
conference room meetings and then linking meetings as appropriate;

 

  (c) Assisting customers with scheduling videoconference rooms;

 

  (d) Assisting customers with using the Equipment and with Problems during the
videoconference meeting; and

 

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  (e) Prearranging for desktop support to either check out the Equipment or to
attend the meetings.

 

  7.11 Monitoring and Reporting Services.

Supplier shall perform the following monitoring and reporting Functions:

 

  (a) Notify Health Net and vendor management; and

 

  (b) Issue broadcast messages regarding system status as needed.

 

  7.12 Exception Requests.

 

  (a) The exception request process is used by employees to fulfill requests for
products or services that are outside of standard Health Net policies, such as
more memory for their PC/Macintosh or international calling access on their
phone line.

 

  (b) Supplier will develop, implement, and maintain an exception process and
perform the Functions required to collect the request, analyze, recommend, and
process the request to fulfillment or denial and advise the originator of the
status. Upon approval, Supplier will take the necessary action to implement the
request.

 

  (c) Supplier shall also perform those exception request processing Functions
that are identified as Supplier responsibilities in the roles and
responsibilities table below.

Table 46. Exceptions Requests

 

Exceptions Requests Roles and Responsibilities

   Supplier    Health
Net

1.       Develop and document exception request procedures in accordance with
Health Net’s current process.

   X   

2.       Review and approve Supplier’s exception process.

      X

3.       Document exception requests in trouble ticket system.

   X   

4.       Provide status to requestor at approval step.

   X   

5.       Follow procedures defined in IMAC process to implement request.

   X   

6.       Provide weekly status of exception requests to Health Net.

   X   

 

8. ENTERPRISE SECURITY MANAGEMENT SERVICES

“Enterprise Security Management Services” means all life cycle Functions
associated with the provision of security Services to Health Net, including
those Functions described in this Section 8, as such security Services relate to
the O&M Services, the Data Center Services, the Data Network Services, the Voice
Network Services, the End User Services, the Help Desk Services, and any other
Services the Parties may add to the scope of the Agreement.

 

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  8.1 Introduction.

 

  (a) Within the first ninety (90) days after the Effective Date, Supplier and
Health Net shall review Health Net’s existing security controls and based upon
this joint review, Supplier will develop a detailed draft of the security
controls document (the “Information Security Controls (ISeC) Document”) that at
a minimum reflects Health Net’s existing security controls, incorporates the
requirements identified in this Section 8, and meets Health Net’s security
policies and procedures (as referenced in Schedule O, as such policies and
procedures may be modified from time to time in accordance with Section 5.4(c)of
the General Terms and Conditions. Supplier shall provide Health Net for Health
Net’s review, comment and approval, the ISeC Document. Supplier shall work with
Health Net to incorporate any comments or suggestions by Health Net into the
ISeC Document. Unless the Parties agree otherwise, in the event of a conflict
between the ISeC Document and this Section 8, this Section 8 should apply and
nothing in the ISeC Document should be interpreted to modify Supplier’s
obligations for security Services as described in this Section 8.

 

  (b) During Transition, Supplier shall implement the security solution,
controls and processes described in the final ISeC Document approved by Health
Net or as otherwise needed to meet the requirements set forth in this Section 8.

 

  8.2 Security Compliance and Regulatory.

 

  (a) Security Policy Management.

 

  (i) Supplier will:

 

  (A) With Health Net’s assistance, gather information to document the security
controls Health Net has in place as of the Effective Date to establish Health
Net’s IT security baseline and to define the technical specifications for the
systems managed by Supplier;

 

  (B) Perform a gap analysis between the security controls Health Net has in
place as of the Effective Date and the (ISeC);

 

  (C) Provide an initial threat identification summary based on the gap analysis
and update the threat identification summary on an annual basis thereafter. Such
summary will contain:

 

  •  

identified threats organized by the ISO 27002 clauses, and

 

  •  

suggested remediation actions for each identified threat;

 

  (D) Define and document the privileged User IDs in the platform specific
technical specifications set forth in the Information Security Controls
Document; and

 

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  (E) On a periodic basis (at least annually), review the Information Security
Controls Document with Health Net and update, as appropriate.

 

  (ii) Health Net will:

 

  (A) Assist Supplier in documenting the security controls Health Net has in
place as of the Effective Date;

 

  (B) Provide contact information and security policies, and any updates
thereto;

 

  (C) Assist Supplier in developing the Information Security Controls Document,
as described in Section 8.2(a)(i)(A) - Section 8.2(d)(i)(C), above;

 

  (D) Review the threat identification summary; and

 

  (E) On a periodic basis (at least annually), review the Information Security
Controls Document with Supplier and provide recommended updates, as appropriate.

 

  (iii) Supplier shall also perform those Functions listed in the roles and
responsibilities table below, except for those Functions that are expressly
identified as retained Health Net responsibilities in the roles and
responsibilities table below.

 

Security Roles and Responsibilities

   Supplier    Health Net

1.      Define security requirements and policies.

      X

2.      Propose security standards, and procedures based on industry security
best practices and that comply with Health Net policies and procedures.

   X   

3.      Review and approve security standards and procedures.

      X

4.      Implement security plans consistent with Health Net security policies.

   X   

5.      Review and approve security plans.

      X

6.      Comply with Health Net processes and procedures for adding, changing,
enabling/disabling and deleting Log-on/security-level access of Health Net
employees, agents and Subcontractors.

   X   

7.      Perform log-on/security-level access changes as detailed in processes
and procedures.

   X   

8.      Maintain logical security of all Equipment and Software.

   X   

9.      Establish firewall/Intrusion Detection requirements.

      X

10.    Install, configure, operate and maintain the security-related Equipment
and Software used as part of the Security Solution or otherwise used by Supplier
to comply with Health Net’s security requirements, including all
firewall/intrusion detection Equipment.

   X   

 

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Security Roles and Responsibilities

   Supplier    Health Net

11.    Address security violations that originate outside of the hosted
network(s) (including by establishing workarounds to avoid the impacts of the
security violation). Specific examples include DOS attacks, spoofing, Web
exploits.

   X   

12.    Demonstrate to Health Net the ability to remain up to date with current
security trends, threats, and common exploits, by actively participating in
industry standard security forums and users groups.

   X   

 

  (iv) Supplier shall comply with (i) the security requirements set forth in
Exhibit A-6, as such requirements relate to the provision of the Services for
the Health Net Federal Services business unit and; (ii) all Health Net policies
and procedures related to security that are disclosed to Supplier, including
those set forth in Schedule O.

 

  (b) Security Compliance Support. Supplier will:

 

  (i) Perform periodic security reviews to validate compliance (for example,
validating access authorization per Health Net’s instruction, the correct use of
logical control features); and

 

  (ii) Identify and manage security risks and exposures within Supplier’s
control as part of the Services.

 

  (c) Security Audit Management.

 

  (i) Supplier will:

 

  (A) Without limiting Supplier’s obligations set forth in Section 18 of the
General Terms and Conditions, provide a security audit subject matter expert (in
addition to the Supplier Personnel performing the day-to-day Services) to assist
Supplier Personnel in performing Supplier’s security audit obligations, up to
1620 hours;

 

  (B) Facilitate security audits and reviews;

 

  (C) Perform non-compliance support audit activities for Supplier internal
audits, external client reviews and third party reviews; and

 

  (D) Coordinate issues resolution identified during the security audit process
and provide recommendations for resolution.

 

  (ii) Health Net will:

 

  (A) Provide a Health Net point of contact for escalation of issues related to
security audits;

 

  (B) During the Transition Period, perform a review of each Transitioned
Employee’s system access authorizations to confirm the need for the same access
requirements following the Effective Date and advise Supplier of any required
changes; and

 

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  (C) Subject to the confidentiality obligations that Health Net may have with
its auditors, provide Supplier with Health Net’s security audit history.

 

  (iii) Supplier shall also perform those Functions listed in the roles and
responsibilities table below, except for those Functions that are expressly
identified as retained Health Net responsibilities in the roles and
responsibilities table below.

 

Security Audit Services Roles and Responsibilities

   Supplier    Health Net

1.      Establish security audit policies.

      X

2.      Provide technical expertise for security audits.

   X   

3.      Perform periodic security audits in accordance with Health Net policies
and Service Levels.

   X   

4.      Provide periodic reports listing audit results and recommend corrective
action for failed audit components.

   X   

5.      Review periodic audit reports and approve corrective action.

      X

 

  (d) Regulatory Program Management.

 

  (i) Supplier will:

 

  (A) Assist Health Net in the development of testing criteria for Health
Net-identified regulatory controls and Health Net-identified industry standard
controls (e.g., PCI) and implement, as appropriate;

 

  (B) Utilize Supplier processes, tools, and infrastructure, as appropriate, and
maintain supporting Documentation in support of Health Net-identified regulatory
controls and Health Net-identified industry standard controls (e.g., PCI); and

 

  (C) In accordance with the Health Net-identified regulatory controls, manage
regulatory training for Supplier and maintain supporting Documentation.

 

  (ii) Health Net will:

 

  (A) Provide Health Net-identified regulatory controls and industry standard
controls (e.g., PCI); and

 

  (B) Develop, with Supplier’s assistance, testing criteria for Health
Net-identified regulatory controls and Health Net-identified industry standard
controls (e.g., PCI).

 

  (e) Security Management.

 

  (i) Supplier will:

 

  (A) Provide a single Supplier point of contact with responsibility for
day-to-day security management;

 

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  (B) Perform risk and issue management, including:

 

  •  

establishing procedures for logging, alarming and reporting of security
violations and issues;

 

  •  

managing to resolution security risks identified as a result of reviews and
audits, changes in Supplier or Health Net environment, changes in operating
practices, processes or technology; and

 

  •  

notifying relevant parties of the risks, their potential impact and actions to
mitigate the impact.

 

  (C) Provide monthly security report.

 

  (ii) Health Net will:

 

  (A) Provide a Health Net point of contact for escalation of issues related to
the security Services;

 

  (B) Communicate the security procedures to End Users (for example, login
procedures, password requirements, use of anti virus programs, data and
equipment security procedures); and

 

  (C) Notify Supplier of changes Health Net plans to make to its security
policies and standards before implementation.

 

  8.3 Infrastructure Protection.

 

  (a) Emergency Response Services.

 

  (i) Security emergency response Services are those Functions associated with
the tracking and review of security Incidents and Problems, including notifying
Health Net of such Incidents and Problems, and to manage containment,
eradication and recovery of all security Incidents and Problems. Security
Incidents and Problems include any real or suspected adverse event in relation
to the security of Health Net systems or computer networks, network or host
activity that is reasonably suspected as threatening the security of Health Net
systems, a violation of a Health Net security policy, attempts (either failed or
successful) to gain unauthorized access to a system or its data, malicious
connectivity disruption or denial of service, unauthorized use of a system for
the processing or storage of data, or changes to system hardware, firmware, or
Software characteristics without the owner’s knowledge, instruction, or consent.
Supplier’s responsibilities in this regard include:

 

  (A) Review all security alerts to determine whether the alert represents a
“false positive” or indicates a possible Incident or Problem to be investigated
and resolved.

 

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  (B) Establish a single collection point (i.e. web portal) that allows Health
Net to review (i) all automated alerts received from a security services device
(e.g., from: NIDS, HIDS, penetration testing) and (ii) Supplier’s investigation
results and Supplier’s determination of whether the alert represents a “false
positive” or possible Incident or Problem to be investigated and resolved.

 

  (C) Identification and removal of Viruses/worms, malicious code and spyware
from infected Health Net systems as required by Section 19.9 of the Agreement.

 

  (D) Categorization of all suspected security Incidents or Problems based on
their Priority (as defined in Exhibit B-3). Supplier shall notify Health Net of
all Priority 1 and Priority 2 security Incidents and all other security
Incidents that have the potential to materially impact Health Net in accordance
with the Service Levels. On a monthly basis, Supplier will provide Health Net
with a report of all confirmed security Incidents, including those categorized
as Low –Priority 3.

 

  (E) Utilization of emergency response plans to help minimize the effect of
future attacks; and

 

  (F) Provision of advice and guidance on such topics as Internet security
incident assessment, preparedness, management, and response.

 

  (ii) Health Net will:

 

  (A) Formally declare a security incident;

 

  (B) Determine if a security incident is a commercial privacy breach and
implement emergency response plan, as appropriate; and

 

  (C) Escalate declared security incident within the Health Net organization, as
appropriate.

 

  (iii) Supplier shall also perform those Functions listed in the roles and
responsibilities table below, except for those Functions that are expressly
identified as retained Health Net responsibilities in the roles and
responsibilities table below.

 

Incident Management Services Roles and Responsibilities

   Supplier    Health Net

11.    Identify and provide countermeasures for Virus / worm malicious code and
spyware attacks.

   X   

12.    Establish security Incident response policies.

      X

13.    Provide Incident response services for security Incidents in accordance
with Health Net’s policies and the Service Levels.

   X   

14.    Define security Incident reporting requirements.

      X

15.    Provide security Incident reporting.

   X   

 

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Incident Management Services Roles and Responsibilities

   Supplier    Health Net

16.    Provide all communications to Health Net business units, business
partners, vendors, law enforcement, media or other external parties.

      X

17.    Report security violations to Health Net. Supplier has the responsibility
for isolating violations to a specific Software or access point. Supplier is
also responsible for tracking violations to a specific MAC address, port
address, and UserID where possible.

   X   

18.    Resolve security violations.

   X   

19.    Define and implement corrective safeguards to eliminate or prevent future
security Incidents.

   X   

20.    Review, approve and monitor corrective safeguard implementations.

      X

 

  (iv) Without limiting Supplier’s obligations set forth elsewhere in this
Schedule A or in Schedule B (Service Levels), Supplier shall first prioritize
containment of the Incident or Problem (including by taking steps necessary to
minimize the security threat (e.g., immediately disconnecting the resources from
the network, resolving user access, implementing software, defining access
controls lists, or other appropriate means)) and then work to eradicate and/or
resolve the Incident or Problem.

 

  (b) X-Force Threat Analysis Services.

 

  (i) Supplier will:

 

  (A) Manage daily security threats through comprehensive evaluation of global
online threat conditions and detailed analyses tailored for Health Net;

 

  (B) Provide daily summaries of current and forecast assessments for active
vulnerabilities, Viruses, worms and threats, including links to recommended
fixes and security advice;

 

  (C) Provide customized and configurable notifications and current alert
status; and

 

  (D) Provide alert trending and attack metrics.

 

  (ii) Health Net will:

 

  (A) Provide a list of End User e-mail addresses to be monitored and any
updates as they occur; and

 

  (B) Maintain a list of End User notification preferences.

 

  (c) Managed Intrusion Detection and Prevention Services.

 

  (i)

Security intrusion detection and prevention Services are the Functions
associated with the provision, support, modification and maintenance of tools
that provide the ability to capture and analyze all network traffic (including
LAN, wireless networks)

 

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that passes its sensors looking for current attack signatures (e.g., NIDS
(Network-based Intrusion Detection Service)) and identify changes to selected
files (e.g., HIDS (Host-based Intrusion Detection Service)), including all
Functions related to level-one level-two and level-three support for NIDS and
HIDS.

 

  (ii) As of the Effective Date, NIDS is deployed in the production environment.
Supplier shall expand this service to include monitoring of all Intranet
networks. Supplier shall also implement HIDS to cover one hundred thirteen
(113) servers designated by Health Net. As of the Effective Date, the servers
designated by Health Net are as follows:

 

  (A) Ten (10) UNIX web servers;

 

  (B) Fifteen (15) UNIX database servers;

 

  (C) Nineteen (19) Windows web servers;

 

  (D) Thirty (30) Windows database servers;

 

  (E) Thirty-four (34) Windows domain controller servers; and

 

  (F) Five (5) Windows application servers.

 

  (iii) Security intrusion detection Services include:

 

  (A) Supplier shall provide 24x7 monitoring, enabling review of alerts in
real-time. The reviews will be performed in accordance with the specified
Service Levels depending upon the Priority. Health Net’s information security
and/or the business unit involved must be notified.

 

  (B) Supplier shall implement a process to notify Health Net’s information
security in accordance with the Service Levels regardless of the day-of-week or
time-of-day for the most serious alerts [NIDS and HIDS]. Examples include, but
are not limited to [NIDS] “successful user privilege gain”, [NIDS] “successful
administrator privilege gain”, and [HIDS] key binary file changes.

 

  (iv) Supplier will:

 

  (A) Monitor, manage, configure and support network intrusion detection and
intrusion prevention sensors;

 

  (B) Actively or passively monitor network traffic and block known malicious
activity in accordance with the security policy configuration;

 

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  (C) Escalate security events and incidents via e-mail or the web portal, as
appropriate;

 

  (D) Report findings following each escalation;

 

  (E) Provide high level and in-depth reporting via the web portal on the
security of Health Net’s networks;

 

  (F) Perform security policy configuration changes needed to resolve network
connectivity issues and critical attacks; and.

 

  (G) Be responsible for resolving and remediating security events.

 

  (v) Supplier shall also perform those Functions listed in the roles and
responsibilities table below, except for those Functions that are expressly
identified as retained Health Net responsibilities in the roles and
responsibilities table below.

 

Security Intrusion Detection Services Roles and Responsibilities

   Supplier    Health Net

1.      Develop policies and standards for intrusion detection for all Health
Net Data Networks; provided that as of the Effective Date Health Net does not
require wireless network intrusion detection, but does require Supplier to
perform wireless network detection activities (including periodic network
sniffer tests) to identify, investigate and resolve unauthorized wireless
networks, including LAN, wireless networks.

   X   

2.      Implement intrusion detection agents and capabilities.

   X   

3.      Develop and define management reporting on intrusion detection
Incidents.

   X   

4.      Review and approve policies and management reporting for intrusion
detection.

      X

 

  (d) Managed Protection Services.

 

  (i) Network. Supplier will:

 

  (A) Monitor and support the networks using specific Supplier Internet Security
Systems (ISS) products (i.e., firewall, VPN, intrusion protection sensors,
content filtering, anti-spam, anti-virus) to assist in protecting from Internet
threats;

 

  (B) Monitor, manage and configure network intrusion prevention sensors;

 

  (C) Escalate security events via e-mail or the web portal, as appropriate;

 

  (D) Implement virtual patches which provides active blocking capabilities so
Health Net is secure until patching of network devices;

 

  (E) Provide incident report following each escalation; and

 

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  (F) Provide high level and in-depth reporting via the web portal on the
security of Health Net’s networks.

 

  (ii) Server. Supplier will:

 

  (A) Monitor, manage and configure Supplier ISS protection agents;

 

  (B) Provide server based protection securing the underlying operating system
by preventing attackers from exploiting the operating system and application
level vulnerabilities;

 

  (C) Monitor all traffic to and from the servers:

 

  •  

to detect and prevent inbound and outbound attacks; and

 

  •  

block new and unknown attacks such as Trojans, brute force attacks, unauthorized
access and worms.

 

  (D) Escalate security events via e-mail or the web portal, as appropriate;

 

  (E) Implement virtual patches which provides active blocking capabilities so
Health Net is secure until patching of servers;

 

  (F) Be responsible for resolving and remediating security events;

 

  (G) Be responsible for managing and supporting monitored servers;

 

  (H) Provide incident report following each escalation; and

 

  (I) Provide high level and in-depth reporting via the web portal on the
security of Health Net’s servers.

 

  (e) Security Event and Log Management Services.

 

  (i) Supplier will:

 

  (A) Collect security or log data in a text based format;

 

  (B) Archive, analyze, correlate and trend events and logs, while managing
response and remediation workflow;

 

  (C) Provide security events and log data online for one year; and

 

  (D) Analyze security events from select intrusion detection and intrusion
prevention devices and provide alerts via the web portal.

 

  (ii) Supplier shall also perform those Functions listed in the roles and
responsibilities table below, except for those Functions that are expressly
identified as retained Health Net responsibilities in the roles and
responsibilities table below.

 

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Security Event & Logging Services Roles and Responsibilities

   Supplier    Health Net

1.      Maintain and secure the Health Net central repository for Application
specific, network specific, and system specific log files.

   X   

2.      Establish security logging policies.

      X

3.      Maintain logs files in accordance with Health Net policies and Service
Levels.

   X   

4.      Provide routine log analysis in accordance with Health Net policies and
Service Levels.

   X   

5.      Escalate suspicious log records for investigation as a security
Incident.

   X   

 

  (f) URL Filtering.

 

  (i) Supplier will:

 

  (A) With Health Net’s assistance, develop, implement and maintain the URL
filtering policy, including violation reporting procedures;

 

  (B) Install, test, configure and maintain URL filtering environment;

 

  (C) In accordance with the URL filtering policy, control End User access to
web sites (i.e., allow or block access based on person(s), groups, time of day,
IP addresses, bandwidth or time allotment);

 

  (D) Notify Health Net, in accordance with the established procedures, of URL
filtering violations; and

 

  (E) Provide monthly URL monitoring reports and, upon request by Health Net,
individual usage reports.

 

  (ii) Health Net will:

 

  (A) Provide Health Net’s business guidelines for End User Internet access and
any updates as they occur; and

 

  (B) Assist Supplier in developing and implementing the URL filtering policy,
including violation reporting procedures.

 

  (g) E-mail Security.

 

  (i) Supplier will:

 

  (A) For anti-spam:

 

  •  

with Health Net’s assistance, develop, implement and maintain the e-mail
security policy, including violation reporting procedures;

 

  •  

scan Health Net’s inbound e-mail for spam & quarantine;

 

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  •  

provide the capability to create filters to prevent spam and allow e-mail (i.e.,
black list, white list);

 

  •  

Make recommendations to Health Net for anti-spam black list and white list; and

 

  •  

using Health Net approved black list and white list, identify spam and take
action in accordance with the e-mail security policy (i.e., tag, redirect,
delete).

 

  (B) For porn filtering:

 

  •  

with Health Net’s assistance, develop, implement and maintain the e-mail
security policy, including violation reporting procedures;

 

  •  

scan Health Net’s inbound and outbound e-mail to detect potentially suspected
pornographic images;

 

  •  

implement sensitivity settings and routing options in accordance with the e-mail
security policy (for example, e-mail containing suspect images can be logged
only, tagged, sent or copied to a designated system administrator or deleted).

 

  (C) for e-mail antivirus:

 

  •  

with Health Net’s assistance, develop, implement and maintain the e-mail
security policy, including violation reporting procedures;

 

  •  

scan Health Net’s Internet level e-mail to detect viruses (i.e., known and
unknown);

 

  •  

notify appropriate contact (for example, e-mail sender, intended recipient,
e-mail administrator), in accordance with the established procedures, if an
e-mail or attachment contains a virus;

 

  •  

handle infected e-mail in accordance with the established procedures; and

 

  •  

notify Health Net of any virus infected e-mail that Supplier was unable to
intercept.

 

  (ii) Health Net will:

 

  (A) Approve anti-spam black list and white list;

 

  (B) Provide Health Net’s business guidelines for End User e-mail security and
any updates as they occur; and

 

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  (C) Assist Supplier in developing and implementing the e-mail security policy,
including violation reporting procedures.

 

  8.4 System Currency.

 

  (a) System Security Checking. Supplier will:

 

  (i) Install, test and maintain security policy verification Software;

 

  (ii) Perform system security checks of managed mainframes, mid-range servers,
network devices, and system tools to validate compliance with the technical
specifications documented in the Information Security Controls Document every
six (6) months. System security checks will be performed on a random sample of
systems, with a minimum of 10% of systems sampled. Checks will verify that:

 

  (A) Anti-Virus Software is functional and operating on supported servers;

 

  (B) Technical controls to enforce operating system password policy are in
place; and

 

  (C) Logs of privileged access and log-on/log-off activities are being captured
as defined in the Information Security Controls document technical
specifications.

 

  (iii) Document identified issues and take corrective action on the findings,
as appropriate.

 

  (b) Security Advisory and Integrity.

 

  (i) Supplier will for operating systems, Software tools, and network
infrastructure systems and devices managed by Supplier:

 

  (A) Monitor security patches;

 

  (B) Notify Health Net within three (3) Business Days of implementation of
Supplier-rated high severity security patches;

 

  (C) Install Health Net-approved Supplier rated high security patches within
the following security change window parameters:

 

  •  

minimum of eight (8) hours for each scheduled security change window;

 

  •  

Twenty-four (24) security change windows are required per one thousand
(1000) servers and an additional security change window for each range of one
(1) to forty-two (42) servers thereafter.

 

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  •  

Implement patches in accordance with Health Net’s change management policies and
procedures and in a manner as may be requested by Health Net, including to
minimize disruption to the business or prioritize the implementation of patches
on high-risk Servers, as defined by Health Net.

 

  (ii) Health Net will approve security patches for installation at least one
(1) Business Day before scheduled implementation date.

 

  (c) Malware Defense Management.

 

  (i) Supplier will:

 

  (A) Install, test and maintain anti-malware software on supported servers and
supported desktops;

 

  (B) Push anti-malware definitions, vendor product updates, and policy and
configuration updates to supported servers and supported desktops, as
appropriate;

 

  (C) If malware is detected, take corrective action in accordance with the
Information Security Controls Document (i.e., prevent, detect and remove malware
infections and respond to malware security incidents);

 

  (D) Notify Health Net, in accordance with the established procedures, if
malware is detected on a supported server or supported desktop;

 

  (E) Perform Virus definition, pattern file updates and policy configuration;
and

 

  (F) Provide monthly malware defense management reports.

 

  (ii) Health Net will provide Health Net’s security policy and any updates as
they occur.

 

  (d) Vulnerability Management Services.

 

  (i) Supplier will:

 

  (A) Maintain a list of Health Net IP addresses to scan;

 

  (B) Identify vulnerabilities within the network perimeter using Supplier
policies;

 

  (C) Perform historical trending of vulnerability data;

 

  (D) Be responsible for resolving application related issues discovered during
a vulnerability scan;

 

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  (E) Provide vulnerability scanning reports which include:

 

  •  

scan results reflecting identified vulnerabilities for corrective action to be
taken, as appropriate; and

 

  •  

summary reports and trend analysis provided via the web portal.

 

  (ii) Health Net will approve Supplier recommendations for the scanning profile
containing the following:

 

  (A) System and network devices to be scanned;

 

  (B) Frequency of scanning;

 

  (C) Type of scan;

 

  (D) Vulnerabilities that are not security policy violations; and

 

  (E) Time frames when scans will be executed.

 

  (iii) Supplier shall also perform those Functions listed in the roles and
responsibilities table below, except for those Functions that are expressly
identified as retained Health Net responsibilities in the roles and
responsibilities table below.

 

Security Vulnerability Services Roles and Responsibilities

   Supplier    Health Net

1.      Establish Health Net security risk policies.

      X

2.      Conduct scheduled vulnerability scans of Health Net IT environment.

   X   

3.      Support Health Net in Health Net scheduled vulnerability scans for
specific systems subject to government and federal requirements.

   X   

4.      Determine the security risk of new projects.

   X   

5.      Provide reporting on security vulnerability services.

   X   

6.      Review and approve security reporting.

      X

 

  (e) Supplier Penetration Testing.

 

  (i) Supplier will:

 

  (A) Develop, maintain and implement the applicable processes and procedures
for penetration testing;

 

  (B) Perform penetration testing to determine the current level of
vulnerabilities within Health Net’s network environment;

 

  (C) Evaluate Health Net’s existing network security architecture, policies and
procedures;

 

  (D) Provide Health Net a penetration testing report detailing identified
exposures, system rating, risk assessment, and remediation plan;

 

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  (E) Review findings with Health Net to mitigate identified risks and to
improve overall security posture; and

 

  (F) Implement risk mitigation solutions (i) as necessary in order to remain in
compliance with Health Net security requirements and policies and (ii) otherwise
as requested by Health Net in accordance with the Change Control Process.

 

  (ii) Health Net will:

 

  (A) Identify the system and network devices to be assessed; and

 

  (B) Attend review meeting with Supplier to develop a detailed strategic plan
to mitigate identified risks and to improve overall security posture.

 

  (iii) Supplier shall also perform those Functions listed in the roles and
responsibilities table below, except for those Functions that are expressly
identified as retained Health Net responsibilities in the roles and
responsibilities table below.

 

Security Penetration Services Roles and Responsibilities

   Supplier    Health Net

1.      Propose policies for security penetration testing.

   X   

2.      Review and approve policies for security penetration testing.

      X

3.      Conduct security penetration testing on Health Net systems.

   X   

4.      Provide reporting on security penetration testing results.

   X   

5.      Develop recommendations for improved security.

   X   

6.      Review and approve recommendations for improved security.

      X

7.      Provide penetration security reporting.

   X   

 

  (f) Health Net Penetration Testing.

 

  (i) Health Net may, from time to time and with thirty (30) days prior written
notice to Supplier (or such other notice period as may be mutually agreed by the
Parties), perform penetration tests on (1) systems hosting Health Net owned URLs
and IP addresses or (2) systems dedicated to providing the Services, provided
that Health Net will:

 

  (A) Consult with Supplier to develop a testing plan,

 

  (B) Provide Supplier with a copy of the penetration testing report detailing
identified exposures, system rating, risk assessment, and remediation plan;
provided however, that Health Net may choose not to disclose information related
to equipment or software not in scope under this Agreement (e.g., deficiencies
in applications software for which Supplier does not have responsibility under
this Agreement), and

 

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  (C) Review findings with Supplier to mitigate identified risks and to improve
overall security posture.

 

  (ii) Supplier will

 

  (A) Upon request by Health Net, assist in the performance of the penetration
testing;

 

  (B) Attend review meeting with Health Net to develop a detailed strategic plan
to mitigate identified risks and to improve overall security posture, and

 

  (C) Implement risk mitigation solutions (i) as necessary in order to remain in
compliance with Health Net security requirements and policies and (ii) otherwise
as requested by Health Net in accordance with the Change Control Process.

 

  (iii) Supplier shall be relieved from paying Service Level Credits for
Critical Service Level Failures that occur solely as a result of Health Net
exercising its right to perform penetration testing pursuant to this
Section 8.4(f) (i.e., but for Health Net exercising its right under this Section
such Critical Service Level Failure would not have occurred); provided that
Supplier has fulfilled the obligations set forth in Section 8.3 of the General
Terms and Conditions.

 

  8.5 Identity and Access.

 

  (a) Management of Privileged User IDs and Supplier User IDs.

 

  (i) For the operating systems, software tools and network infrastructure
systems and devices under Supplier management, Supplier will:

 

  (A) With Health Net’s assistance, perform a baseline inventory of access IDs;

 

  (B) perform the following provisioning and compliance activities:

 

  •  

provision and manage user IDs for Supplier personnel;

 

  •  

perform quarterly employment verification for Supplier personnel and remove
Supplier user IDs, as appropriate;

 

  •  

administer passwords for Supplier user IDs and privileged user IDs;

 

  •  

provision and manage the Supplier and Health Net privileged user IDs as defined
in the platform specific technical specifications set forth in the Information
Security Controls Document;

 

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  •  

revalidate Suppliers privileged authorizations and continued business need
annually and remove user IDs, as appropriate; and

 

  •  

provide Health Net a list of Health Net privileged user IDs for revalidation and
remove privileged user IDs, as directed by Health Net.

 

  (C) Maintain audit records for privileged user ID approvals, verifications and
revalidations and retain such records for two (2) years;

 

  (D) Provide for Health Net’s review and approval, as appropriate, non-expiring
passwords and policy exception requests; and

 

  (E) Capture system security logs of privileged access and log-on/log-off
activities as defined in the Information Security Controls Document and retain
log records for one (1) year.

 

  (ii) Health Net will:

 

  (A) During Transition, provide Supplier with access to the necessary files and
systems in order for Supplier to perform a baseline inventory of access IDs for
the systems for which Supplier has security responsibility;

 

  (B) Authorize User IDs and passwords for Health Net personnel for the
operating systems, software tools and network infrastructure systems and devices
under Supplier management;

 

  (C) Revalidate Health Net privileged user IDs; and

 

  (D) Approve non-expiring passwords and policy exception requests, as
appropriate.

 

  (b) Password Management for Health Net User IDs.

 

  (i) Supplier will:

 

  (A) Perform password resets for user IDs using Health Net provided and
maintained employee authentication data; and

 

  (B) Investigate Health Net user ID password issues, as identified by Health
Net.

 

  (ii) Health Net will:

 

  (A) Provide and maintain employee authentication data in PeopleSoft for Health
Net user IDs; and

 

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  (B) Establish the criteria for resetting passwords and disclosing such
passwords to authorized personnel.

 

  (c) Health Net User ID Lifecycle Administration.

 

  (i) For the operating systems, software tools and network infrastructure
systems and devices under Supplier management, Supplier will:

 

  (A) Provision and manage Health Net-identified user IDs for Health Net
personnel; and

 

  (B) Investigate Health Net user ID security issues, as identified by Health
Net.

 

  (ii) Health Net will:

 

  (A) During Transition identify Health Net user IDs; and

 

  (B) Provide approved provisioning requests for user IDs for Health Net
personnel.

 

  (d) Health Net User ID Administration Compliance Support.

 

  (i) For Health Net End User user IDs for Equipment and Software, Supplier
will:

 

  (A) Perform annual employment verification for Health Net employees.

 

  (B) Provide Health Net a listing of their user IDs to allow Revalidation per
the ISeC ;

 

  (C) Perform annual revalidation of Supplier privileges and access to shared
user IDs and remove such privileges and access, as appropriate;

 

  (D) Maintain audit records for user ID and privileged user ID approvals,
verifications and revalidations and retain such records for two (2) years; and

 

  (E) Provide for Health Net’s review and approval, as appropriate, non-expiring
passwords and policy exception requests.

 

  (ii) Health Net will:

 

  (A) Revalidate Health Net user IDs, privileges and access to shared user IDs
and direct Supplier to remove user IDs, as appropriate; and

 

  (B) Approve non-expiring passwords and policy exception requests, as
appropriate.

 

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  (e) Physical Security and Access Management.

 

  (i) Supplier will provide the following physical security controls at Supplier
Facilities:

 

  (A) Define controlled areas, perform a physical security assessment and
document any identified control and audit issues;

 

  (B) Identify ownership of control and audit issues and manage closure of
Supplier-owned issues;

 

  (C) Perform initial access baseline review and execute formal revalidation for
new protected and restricted areas;

 

  (D) Develop and implement the access authorization processes;

 

  (E) Manage the implementation of the physical security environment for the
controlled areas;

 

  (F) Perform maintenance, testing and daily operations of the physical security
environment; and

 

  (G) Manage permanent and temporary access authorization devices.

 

  (ii) In addition, Supplier will perform those physical security Services in
Exhibit A-13 (Facilities Services Matrix) except for those Services expressly
identified as Health Net responsibility.

 

  8.6 Security Firewall Management Services.

 

  (a) Security firewall management Services are those Functions related to the
protection of Health Net’s networks, including by providing the following types
of capabilities: firewall engineering and management, access control list
engineering and management, security monitoring, compliance with Health Net’s
policies and standards, helpdesk support (levels 1-3), and backup/restore
services. As part of the Security firewall management Services:

 

  (i) All testing will be done in a simulated test environment, isolated from
Health Net’s entire network environment.

 

  (ii) All technology selections must be reviewed and approved by Health Net
prior to use in production environments. All firewall changes must be documented
for auditability.

 

  (iii) The firewall Services will provide the necessary security to create
specific zones, limiting access to specific IP/port combinations and in certain
zones down to the VLAN level using VACLs. Non-approved traffic will be dropped
and logged, unless a logging exception is granted.

 

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  (A) Maintain all WAPs in accordance with Health Net’s WAP security policy.

 

  (B) The firewall Services will only permit the necessary services into or
through the production network, furnishing “Internet-Only” wireless access to
guests and contractors at in-scope locations. The firewalls will have to enforce
non-Health Net network access after authentication is performed.

 

  (iv) Monthly reports on availability, number of requests, and rule/object
counts are made available to management. Quarterly reports on firewall interface
availability are sent to the network design team.

 

  (v) Any critical patches will be scheduled for immediate application, in
accordance with Health Net’s standard Change Control Process. Beyond that,
Supplier shall perform reviews of the firewall Software, appliance operating
systems, and other supporting Software quarterly to determine if any patches are
required to the environment.

 

  (b) Supplier shall perform the Security firewall management Services,
including those Functions listed in the roles and responsibilities table below,
except for those Functions that are expressly identified as retained Health Net
responsibilities in the roles and responsibilities table below.

Table 47. Security Firewall Services Roles and Responsibilities

 

Security Firewall Services Roles and Responsibilities

   Supplier    Health Net

8.      Recommend and procure firewall Equipment.

   X   

9.      Approve firewall Equipment procurement.

      X

10.    Configure firewall Equipment.

   X   

11.    Perform firewall engineering and firewall security and rules design.

   X   

12.    Approve firewall engineering and security design.

      X

13.    Implement, test and deploy firewalls.

   X   

14.    Assess firewall security and propose alternative security designs.

   X   

15.    Review and approve firewall security designs.

      X

16.    Perform and report on firewall security risk assessments.

   X   

17.    Review and approve firewall risk assessments.

      X

18.    Establish firewall policies.

      X

19.    Provide services in conformance to firewall policies.

   X   

20.    Maintain access control lists (ACL) in accordance with Health Net
policies.

   X   

21.    Review and approve firewall ACL policies.

      X

 

  8.7 Security Engineering Services.

 

  (a)

Security engineering Services are those Functions associated with supporting
information infrastructure protection and analysis and security risk

 

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management, including through the use of technologies such as penetration
testing/vulnerability assessment tools, network monitoring, and intrusion
detection systems. Supplier’s responsibilities in this regard include:

 

  (i) Participating in meetings, presentations and discussions on designs and
reviews of Applications regarding security (COTS Software, internal written
applications, web-based Applications, etc.).

 

  (ii) Supplier will purchase new authentication certificates, on behalf of
Health Net, for any existing certificates expiring as of Effective Date or any
new certificates required from Effective Date onwards. Supplier will also
implement the certificates on the server, and track them for timely renewal.

 

  (iii) Support of third-party external assessments, such as those done for
Internet-facing Applications.

 

  (iv) Participate with business and Application teams to understand the
functionality of the Application, data classification and requirements,
connectivity requirements (i.e. Extranet vs. Internet), the customer base, any
client connectivity requirements, logging and auditing functions, all Software
required for the Application, and all communications required with other systems
(internal or external).

 

  (v) Conduct internal security review prior to Application deployment or
modification.

 

  (vi) Participate in testing and implementation of host security.

 

  (vii) Consult with teams to develop standards, using tools to assess the level
of host security on particular systems, and support in making configuration
changes as necessary.

 

  (viii) Consult with other IT teams to develop and implement a standard
architecture for access control points, such as firewalls and ACLs.

 

  (ix) Develop and document security practices, requirements and exceptions.

 

  (x) Respond to ad-hoc requests, such as firewall changes and/or ideas for new
products/Software.

 

  (xi) Support of firewall admin team in reviewing firewall rules, ACL entries,
etc. to verify that access control points follow Health Net standards and
practices.

 

  (xii)

Performing exception handling, which includes documenting and understanding the
exception request, identifying the impact of the exception, doing the risk
analysis of the exception and working

 

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with security management and the business owner to understand and either accept
the risk or do what is required to mitigate the risk.

 

  (xiii) Perform weekly review of current firewall rules/ACLs. Conduct quarterly
firewall architecture assessments and security reviews and gap analyses of
firewall/routable devices.

 

  (xiv) Manage Incident responses – security engineering must be available 24X7
for any issues that require security Incident response support.

 

  (xv) Participate in Problem and Incident management resolution meetings
(including “SWAT” team calls), as needed based on the scope of the Problem or
Incident; provide additional ad hoc production support and technical advising to
Health Net and other third parties as necessary.

 

  (xvi) Conduct reviews of all designs, requirement, standards, practices, and
other security-related decisions to confirm that the Security engineering
Services meet Health Net requirements and policies.

 

  (b) Supplier shall perform the security engineering Services, including those
Functions listed in the roles and responsibilities table below, except for those
Functions that are expressly identified as retained Health Net responsibilities
in the roles and responsibilities table below.

Table 48. Security Engineering Roles and Responsibilities

 

Security Engineering Services Roles and Responsibilities

   Supplier    Health Net

1.      Provide security engineering services.

   X   

2.      Consult with other IT teams to recommend, implement and maintain Health
Net’s standard architecture for access control points, such as firewalls and
ACLs.

   X   

3.      Participate in product evaluations to evaluate the security stance of
the product (i.e. portal).

   X   

4.      Produce logical network data flow diagrams for each product evaluated.

      X

5.      Support Health Net security requirements regarding firewall rules, ACL
entries, etc. to verify access control points follow Health Net standards and
practices.

   X   

6.      Review and approve firewall rules, ACL entries, etc. to verify access
control points follow Health Net standards and practices.

      X

7.      Participate in internal security reviews with appropriate security and
engineering teams to review the specific design and Application requirements for
each project to verify all existing Health Net security practices and
requirements are met.

   X   

8.      Support Health Net in internal security reviews to verify all existing
Health Net security practices and requirements as specified in the Agreement are
met for systems subject to federal, government requirements.

   X   

 

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Security Engineering Services Roles and Responsibilities

   Supplier    Health Net

9.      Attend meetings as necessary, including but not limited to status
meetings, requirements gathering, designs reviews, and implementation planning.

   X   

10.    Resolve security threats such as newly discovered vulnerabilities,
Viruses, etc.

   X   

11.    Provide senior level engineering technology support for security
technologies or other tools, and assist in root cause analysis.

   X   

12.    Interfacing with vendors and/or customers as needed by the business units
in support of specific requests/Incidents/Problems. Troubleshooting issues or
evaluating new connectivity/products/etc.

   X   

13.    Participating with team members and technical groups in process
improvements, project/initiative task handoffs between the various teams or
project prioritization/coordination.

   X   

14.    Participating in operational readiness testing efforts. This requirement
varies by project.

   X   

15.    Review firewall architecture and rules

   X   

16.    Provide firewall assessment.

   X   

17.    Review security rules for all routable devices.

   X   

18.    Security policy review and gap analysis.

   X   

19.    Provide recommendations for improved security policies and architecture.

   X   

20.    Participate and approve security architecture review.

      X

21.    Review and approve recommendations for improved security.

      X

 

  8.8 Additional Security Terms.

 

  (a) General. Health Net acknowledges that, for purposes of performing the
Services associated with the security standards herein and subject to the terms
of this Agreement, Supplier is authorized to access to Health Net’s networks and
computer systems.

 

  (b) Permission to Perform Testing.

 

  (i) Without limiting Supplier’s obligations to meet the Service Levels or
other performance requirements set forth in this Agreement, the Parties
acknowledge and agree to the following with respect to Supplier’s performance of
vulnerability scans and vulnerability assessments:

 

  (A) Health Net authorizes Supplier to perform a security review of Health
Net’s selected IP addresses. Supplier shall not perform scans of IP addresses
owned by third parties;

 

  (B) Additional log messages may be generated in connection with performance of
such reviews resulting in additional log file disk space consumption;

 

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  (C) The performance and throughput of Health Net’s system(s) as well as the
performance and throughput of associated routers and firewalls may be
temporarily degraded;

 

  (D) As required to perform the Services described in this Section 8.8(b),
physical access is authorized on Health Net’s premises during the attempts to
penetrate the selected sites;

 

  (E) Some data may be changed temporarily as a result of probing
vulnerabilities. Supplier shall make sure that such data is changed back to its
original form at the end of testing;

 

  (F) With prior approval from Health Net, Supplier may disclose this grant of
authority to a Subcontractor; and

 

  (G) The scan may trigger alarms by intrusion detection systems.

 

  (ii) Notwithstanding the foregoing, Supplier agrees that it will perform
vulnerability scans and vulnerability assessments in a manner that is consistent
with industry standards and the practices of well-managed companies that perform
services similar to the Services.

 

  (iii) Prior to disclosing the results of any vulnerability scans or
penetration tests to a third party, Health Net shall (i) provide Supplier with
reasonable notice of such disclosure, and (ii) for vulnerability scans and
penetration tests performed on networks and systems that are not dedicated to
providing the Services, receive approval from Supplier (not to be unreasonably
withheld) prior to making such disclosure.

 

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SCHEDULE B

SERVICE LEVELS

 

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SCHEDULE B

SERVICE LEVELS

 

1.

  

INTRODUCTION

   3

2.

  

DEFINITIONS

   3

2.1

  

CERTAIN DEFINITIONS

   3

2.2

  

OTHER TERMS

   4

3.

  

MEASUREMENT, REPORTING AND SUPPORTING INFORMATION

   4

3.1

  

MEASUREMENT

   4

3.2

  

MEASUREMENT TOOLS

   4

3.3

  

REPORTS AND SUPPORTING INFORMATION

   5

4.

  

SERVICE LEVEL METHODOLOGY

   6

4.1

  

GENERAL

   6

4.2

  

SERVICE LEVEL CODES

   6

4.3

  

FAILURE TO PERFORM

   7

4.4

  

SERVICE LEVEL CREDITS

   8

5.

  

MODIFICATIONS AND IMPROVEMENTS TO SERVICE LEVELS

   9

5.1

  

DELETIONS OF SERVICE LEVELS

   9

5.2

  

ADDITIONS OF SERVICE LEVELS

   9

5.3

  

DESIGNATION OF CRITICAL SERVICE LEVELS AND WEIGHTING FACTORS

   10

5.4

  

CONTINUOUS IMPROVEMENT

   11

5.5

  

ANNUAL MEETING TO ADJUST SERVICE LEVELS

   11

EXHIBIT B-1: SERVICE LEVELS

   B-1

EXHIBIT B-2: FORMULA DEFINITIONS

   B-2

EXHIBIT B-3: REMEDY INCIDENT AND PROBLEM PRIORITY DEFINITIONS

   B-3

EXHIBIT B-4: SCHEDULED MAINTENANCE

   B-4

EXHIBIT B-5: SERVICE REQUEST EXAMPLES

   B-5

 

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1. INTRODUCTION.

This Schedule B sets forth the Service Levels that Supplier is required to meet
or exceed in performing certain of the Services during the Term. This Schedule
also describes (a) the methodology for calculating Service Level Credits that
will be provided to Health Net by Supplier if Supplier fails to meet a Critical
Service Level, and (b) the process the Parties will follow to add, modify or
delete Service Levels during the Term.

 

2. DEFINITIONS.

 

  2.1 Certain Definitions.

 

  (a) “Amount at Risk” means an amount equal to *** of the aggregate monthly
charges payable by Health Net under this Agreement (excluding Managed As
Pass-Through Expenses and Pure Pass-Through Expenses and Transformation
Charges).

 

  (b) “Business Day(s)” mean Monday through Friday (except holidays on which the
offices of Health Net, as applicable, are not open for regular business). Where
this Schedule B provides for the addition or subtraction of a Business Day, the
result will mean the same time of day as the time of an event on the original
Business Day (i.e., a Problem that starts at 3:00 p.m. local time on Monday is
resolved by the following Business Day if such Problem is resolved by 3:00 p.m.
local time on Tuesday, provided that both Monday and Tuesday are Business Days).

 

  (c) “Business Hours” means Monday through Friday from 08:00 to 17:00, local
time, during a Business Day.

 

  (d) “Critical Service Level or CSL” means those Service Levels that are
assigned a Weighting Factor, and for which a Service Level Credit is payable in
the event of a Critical Service Level Failure, and are designated by Health Net
in accordance with Section 5.3 this Schedule B.

 

  (e) “Critical Service Level Failure” means, with regard to any Critical
Service Level, Supplier’s failure to perform at a level that meets the
corresponding Critical Service Level during any particular Measurement Period.

 

  (f) “Measurement Period” means, for any Service Level, the period of time
during which Supplier’s actual performance of the relevant Services is to be
measured against the corresponding Service Level. The Measurement Period for
each Service Level is set forth on Exhibit B-1.

 

  (g) “Pool Percentage Available for Allocation” means *** percentage points.

 

  (h) “Scheduled Maintenance” means the aggregate amount of time during
Maintenance Windows during which Equipment, Software, Services, or data are
scheduled to not be available for use.

 

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  (i) “Service Levels” has the meaning given in Section 6 of the General Terms
and Conditions.

 

  (j) “Service Level Credit” has the meaning provided in Section 4.3(b) of this
Schedule B.

 

  (k) “Service Level Failure” means, with regard to any Service Level, a failure
by Supplier to either (i) perform at the level that meets the corresponding
Service Level during any particular Measurement Period, or (ii) to (A) properly
monitor or measure any Service Level, or (B) report on the performance for any
Service Level in accordance with Section 3.3 below.

 

  (l) “Weighting Factor” means the portion of the Pool Percentage Available for
Allocation that Health Net has allocated with respect to a Critical Service
Level. The Weighting Factor for each of the Critical Service Levels as of the
Effective Date are set forth in Exhibit B-1, and shall be subject to
modification pursuant to Section 5 of this Schedule B.

 

  2.2 Other Terms.

Other terms used in this Schedule B (or any Exhibit or Attachment to this
Schedule B) are either defined in the context in which they are used or are
defined elsewhere in this Agreement, and in each case shall have the meanings
there indicated.

 

3. MEASUREMENT, REPORTING AND SUPPORTING INFORMATION.

 

  3.1 Measurement.

 

  (a) Except as otherwise expressly provided for a particular Service Level in
Exhibit B-1, the Measurement Period for each Service Level shall be each
calendar month during the Term.

 

  (b) Except as otherwise expressly indicated in this Schedule B, all references
to time of day in this Schedule B shall refer to Pacific Time (“PT”), and any
reference to “hour” or “hours” shall mean clock hours.

 

  3.2 Measurement Tools.

 

  (a) Subject to Health Net’s prior written approval, provided that such
approval not be unreasonably withheld, Supplier shall develop and implement
measurement tools and processes required to measure each Service Level in an
automated fashion, where such automation is feasible, such that Supplier’s
actual performance with respect to the Service Level shall be determined using
system generated data.

 

  (b) Supplier shall measure its performance with respect to each Service Level
using tools, processes and methodologies identified for such Service Level in
Exhibit B-1 or as otherwise agreed to by the Parties or as specified pursuant to
Sections 3.2(d), 5.2(b)(i), and 5.2(c) of this Schedule B.

 

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  (c) Supplier shall provide and utilize (and have operational, administrative
and Financial Responsibility for) the necessary measurement and monitoring tools
and procedures required to measure and report Supplier’s performance of the
Services against the applicable Service Levels set forth in this Agreement as of
the Effective Date, and thereafter in accordance with Section 5.2 of this
Schedule B. Such measurement and monitoring shall permit reporting at a level of
detail sufficient to verify compliance with the Service Levels, and will be
subject to verification and review by Health Net. Supplier shall provide Health
Net with information and access to such tools and procedures upon request, for
purposes of verification.

 

  (d) If, after the Effective Date, Supplier desires to use a different
measurement tool, process or methodology for any Service Level, Supplier shall
provide written notice to Health Net proposing:

 

  (i) the alternative measurement tool, process or methodology; and

 

  (ii) any reasonable adjustments to the Service Levels that are necessary to
account for any increased or decreased sensitivity that will likely result from
use of the alternative measurement tool, process or methodology.

Supplier may utilize such alternative measurement tool, process or methodology
only to the extent such tool, and any associated Service Level adjustments, are
approved in writing by Health Net.

 

  3.3 Reports and Supporting Information.

 

  (a) Supplier shall deliver the Monthly Performance Report to Health Net in
accordance with Section 17.3(b) of the General Terms and Conditions.

 

  (b) Upon Health Net’s request, Supplier shall provide to Health Net detailed
supporting information (including raw performance data) relating to Supplier’s
performance relative to the Service Levels. Such information shall at a minimum
include all information that is necessary for Health Net to verify the accuracy
of Service Level measurements and reporting, and other supporting information as
reasonably requested by Health Net to the extent it is available to Supplier.

 

  (c) Supplier shall make the reporting and supporting information described in
this Section 3.3, available to Health Net both (i) in machine-readable form
suitable for use on a personal computer; and (ii) via a secure website;
provided, however, that if requested by Health Net, Supplier shall also provide
to Health Net “real time” electronic access to performance data (i.e., access to
performance data that reflects performance at the then-present time), to the
extent that the agreed-upon measurement tools used to measure performance are
capable of providing such access. To the extent that such tools are not capable
of providing Health Net with such “real time” access, Supplier shall promptly
provide access to timely data upon Health Net’s reasonable request.

 

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4. SERVICE LEVEL METHODOLOGY.

 

  4.1 General.

 

  (a) Upon Health Net’s reasonable request, Supplier shall provide, and Health
Net will have access to, Service Level information as reasonably requested by
Health Net to verify the accuracy of Service Level measurements and methodology
described in this Section 4. Service Levels constitute one means, but not the
exclusive means, of measuring Supplier’s performance of its commitment under
Section 5.4 of the General Terms and Conditions.

 

  (b) If a Service Level includes multiple conditions or components (e.g.,
components (a), (b) and(c)), then Supplier’s performance must satisfy each and
every condition or component (i.e., components (a), (b) and (c)) to achieve the
corresponding Service Level.

 

  (c) If any event during the Term requires Supplier to provide any portion of
the Services from a Supplier business continuity recovery environment (“Recovery
Environment”) then once the Services have been restored as required by the RTO
timeframes set forth in Section 2.23 of Schedule A, the Service Levels shall
continue to apply.

 

  4.2 Service Level Codes.

For each of the Service Levels set forth in Exhibit B-1, a corresponding code
has been designated in the “Code” column of the applicable table, as follows:

 

  (a) Code “A”: For each Service Level metric for which “A” is designated as the
applicable code, Supplier shall meet or exceed the corresponding Service Level
and pay applicable Critical Service Level Credits for any Service Level Failures
as soon as Affected Employees are transitioned to Supplier, but in no event
later than *** days after the Effective Date (“Code A”).

 

  (b) Code “B”: For each Service Level metric for which “B” is designated as the
applicable code, Supplier shall begin to meet the corresponding Service Level
and pay applicable Critical Service Level Credits for any Service Level Failures
as of the date provided in Exhibit B-1 in the column entitled “Service Level
Commencement Date.” (“Code B”)

 

  (c) Code “C”: For each Service Level metric for which “C” is designated as the
applicable code, Supplier shall begin to measure the corresponding Service Level
as Affected Employees are transitioned to Supplier, but in no event later than
*** days after the Effective Date and the following shall apply (“Code C”):

 

  (i) The “Baselining Period” for such metric shall mean the six (6) month
period following Suppliers commencement of measurement as required by
Section 4.4(c).

 

 

(ii)

Immediately following the Baselining Period and not later than the eighth
(8th) month after the Effective Date, a Service Level will be

 

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established, which will be no less than *** of the arithmetic mean of the
baselined data collected during the Baselining Period, provided that if there is
a significant deviation and the Parties mutually agree, the Parties may agree to
establish a different Service Level metric or disregard the deviant measure(s)
and continue to baseline for an additional period to be mutually agreed upon;
provided further that if the baselined data demonstrates performance that is
unsatisfactory to Health Net, Supplier will develop a plan to improve
performance and the Parties will meet to establish a mutually agreeable Service
Level. Supplier shall use all Commercially Reasonable Efforts to achieve the
highest possible Service Levels during the Baselining Period.

 

 

(iii)

Immediately following the Baselining Period and not later than the eighth
(8th) month after the Effective Date, Supplier shall meet or exceed the
established Critical Service Level and pay applicable Service Level Credits for
any Service Level Failures associated with such Critical Service Levels.

 

  4.3 Failure to Perform.

 

  (a) For each Service Level Failure, Supplier shall (i) investigate, assemble
and preserve pertinent information with respect to, and report on the causes of,
the problem, including performing a root cause analysis of the problem;
(ii) advise Health Net, as and to the extent requested by Health Net, of the
status of remedial efforts being undertaken with respect to such problem;
(iii) minimize the impact of and correct the problem and begin meeting the
Service Level; and (iv) take appropriate preventive measures and use
Commercially Reasonable Efforts to prevent reoccurrence of such problem in a
timely matter and in no event longer than thirty (30) days after the occurrence
of such event.

 

  (b)

Supplier recognizes that a Critical Service Level Failure may have a material
adverse impact on the business and operations of Health Net and that the damage
from such Critical Service Level Failure is not susceptible to precise
determination. Accordingly, in the event of a Critical Service Level Failure for
reasons other than (i) the wrongful actions of Health Net, Health Net’s
Affiliates or Health Net’s third party contractors (other than Supplier or
Supplier’s subcontractors), provided that Supplier has fulfilled the obligations
set forth in Section 8.3 of the General Terms and Conditions; or (ii) a Force
Majeure Event under Section 24.3 of the General Terms and Conditions, provided
that Supplier has fulfilled the obligations set forth in Section 24.3(b) of the
General Terms and Conditions, then in addition to any non-monetary remedies
available to Health Net under this Agreement, at law or in equity, Health Net
may elect in lieu of pursuing other monetary remedies to recover as its sole and
exclusive monetary remedy for such Critical Service Level Failure a credit
calculated pursuant to Section 4.4 of this Schedule B as liquidated damages
(each such credit, a “Service Level Credit”). Health Net may, in the
alternative, either before or after receiving any particular Service Level
Credit, make a claim for damages against Supplier arising out of Supplier’s
failure to meet the applicable Critical Service Level; provided, however, that
if Health Net had previously received any Service Level Credits as a result of
such failure, then the amount of damages then recoverable by Health Net shall
equal (A) the total amount of damages then recoverable under this Agreement and

 

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incurred by Health Net with respect to such failure, without consideration of
whether any Service Level Credits related to such failure had been provided to
Health Net; less (B) any Service Level Credits previously provided to Health Net
with respect to such failure. This Section 4.3(b) shall not limit Health Net’s
rights with respect to the events upon which Health Net may rely as a basis for
Health Net’s termination of this Agreement for cause.

 

  4.4 Service Level Credits.

 

  (a) Calculation. For each Critical Service Level Failure, the applicable
Service Level Credit referenced in Section 4.3(b) above shall be calculated in
accordance with the following formula:

Service Level Credit = A x B

Where:

A = the applicable Weighting Factor; multiplied by

B = the Amount at Risk for such calendar month.

For Example; assume:

For example, assume that Supplier’s Charges for the month were $100,000.
Additionally, assume the applicable Weighting Factor allocated by Health Net to
such Service Level is *** percentage points. The Service Level Credit due to
Health Net for such Critical Service Level Failure would be computed as follows:

A = ***%; multiplied by

B = ***(which is ***%) of $100,000),

= ***(the amount of the Service Level Credit).

 

  (b) Notification. For each Critical Service Level Failure, Supplier shall
report such failure to Health Net pursuant to Section 17.3(b) of the General
Terms and Conditions and Section 3.3 of this Schedule B. Such report will, at a
minimum, (i) identify and describe as a “Critical Service Level Failure” such
Critical Service Level Failure, and (ii) calculate the amount of the
corresponding Service Level Credit, calculated pursuant to Section 4.4(a) of
this Schedule B, that Health Net may elect pursuant to Section 4.3(b) of this
Schedule B.

 

  (c) Limitations.

 

  (i) In no event shall the sum of the Weighting Factors for all Critical
Service Levels exceed the Pool Percentage Available for Allocation.

 

  (ii) In no event shall the Weighting Factor percentage points for an
individual Service Level be less than *** or exceed *** percentage points of the
Pool Percentage Available for Allocation.

 

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  (iii) Not withstanding Section 4.4(c)(ii) above, in no event shall the
following Critical Service Levels receive a Weighting Factor in excess of ***
percentage points of the Pool Percentage Available for Allocation;

 

  (A) Critical Service Level 1: Annual Customer Satisfaction Survey;

 

  (B) Critical Service Level 2: End User Services, and

 

  (C) Critical Service Level 3: Help Desk Satisfaction Surveys.

 

  (iv) In no event shall the total amount of Service Level Credits payable by
Supplier for Critical Service Level Failures occurring during a calendar month
exceed the Amount at Risk for such calendar month.

 

  (v) If a single incident results in the failure of Supplier to meet more than
one Critical Service Level, Health Net shall have the right to determine which
Critical Service Level and resulting Service Level Credit will apply (for
example, if a system for which there is a System Availability Critical Service
Level is unavailable and an application operating on the affected system is also
unavailable as a result and for which there is an Application Availability
Critical Service Level, Health Net shall have the right to elect to receive the
Service Level Credit associated with the System Availability Critical Service
Level or Application Availability Critical Service Level, but not both). In
order for the foregoing to apply, Supplier shall have the burden of
demonstrating to Health Net’s reasonable satisfaction, that a single event
resulted in the failure of Supplier to meet more than one (1) Critical Service
Level.

 

5. MODIFICATIONS AND IMPROVEMENTS TO SERVICE LEVELS.

 

  5.1 Deletions of Service Levels.

Health Net may at any time during the Term, in its sole discretion upon written
notice to Supplier, delete a then-existing Service Level.

 

  5.2 Additions of Service Levels.

Health Net may, in its sole discretion upon written notice to Supplier, add a
new Service Level. Any additions with respect to Service Levels measuring
then-current Services shall be subject to the following:

 

  (a) If Health Net adds a new Service Level for which there is at least six
(6) months of historical data within the past twelve (12) months and such data
indicates performance that is acceptable to Health Net, then the Service Level
metric shall be ***% of the arithmetic mean of the most recent six (6) months of
historical data, provided that if there is a significant deviation and the
Parties mutually agree, the Parties may agree to establish a different Service
Level metric or disregard the deviant measure(s) and continue to baseline for an
additional period to be mutually agreed upon. For example, ***. Such Service
Level shall become effective as of a date determined by Health Net, but no
earlier than thirty (30) days after written notice from Health Net.

 

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  (b) If Health Net adds a new Service Level for which at least six (6) months
of historical data within the past twelve (12) months does not exist, then such
Service Level shall be baselined in accordance with the following:

 

  (i) Supplier and Health Net shall promptly meet to mutually agree upon the
tools and procedures to be used to measure such new Service Level. Upon such
agreement, Supplier shall promptly implement such agreed upon tools and/or
procedures and begin measuring the new Service Level.

 

  (ii) The “Baselining Period” for each such Service Level shall begin on the
first day of the calendar month following the date upon which Supplier is
capable of beginning to measure such Service Level using the agreed upon tools
and procedures, and continue for six (6) months. Health Net, acting in its sole
discretion, may extend the Baselining Period by informing Supplier of such
extension.

 

  (iii) Supplier shall begin to measure its performance against each such
Service Level commencing on the start date of the relevant Baselining Period,
and shall report on its performance with respect to each such Service Level in
each of the Monthly Performance Reports covering Supplier’s performance during
the Baselining Period.

 

  (iv) Each such Service Level shall become effective as of the expiration of
such Baselining Period, and the corresponding Service Level metric shall be
determined in accordance with Section 5.2(a).

 

  (c) If the addition of a new Service Level in accordance with this Section 5.2
results in additional out-of-pocket expenses to Supplier in order to measure
such new Service Level, then Health Net shall reimburse Supplier for any such
expenses, (i) so long as Supplier informs Health Net of the amount of such
expenses reasonably in advance of incurring them, and (ii) provided that Health
Net may determine not to add the applicable Service Level in order to avoid such
reimbursement obligation.

 

  5.3 Designation of Critical Service Levels and Weighting Factors.

 

  (a) Critical Service Levels.

 

  (i) As of the Effective Date, the Critical Service Levels are designated by
the letter “Y” appearing in the corresponding “Critical Service Level” column in
Exhibit B-1.

 

  (ii) Health Net may from time to time during the Term change, in its sole
discretion, the designation of any Service Level to a Critical Service Level, or
change the designation of any Critical Service Level to a non-Critical Service
Level, each upon written notice to Supplier from Health Net; provided, however,
that Health Net may provide only one such notice during any calendar *** (which
notice may contain multiple changes). For clarity, the changes contemplated in
this Section shall be accomplished by changing Weighting Factors, as set forth
in the next Section.

 

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(iii)

Supplier shall implement such changes described in this Section 5.3(a) not later
than the first (1st) day of the calendar month following forty-five (45) days
written notice from Health Net.

 

  (b) Weighting Factors. Health Net may from time to time during the Term
change, in its sole discretion, the Weighting Factor for any one or more
Critical Service Levels upon written notice to Supplier; provided, however,
that:

 

  (i) Health Net may provide only one such notice during any calendar *** (which
notice may contain multiple changes);

 

  (ii) the sum of the Weighting Factors for all Critical Service Levels shall
not exceed the Pool Percentage Available for Allocation; and

 

  (iii) the Weighting Factor for any single Service Level may not be less than
*** or exceed *** percentage points.

 

  5.4 Continuous Improvement.

The Parties agree to the concept of continuous improvement of Service Levels and
that the Service Levels may be modified during the Term to reflect this concept.
To accomplish this, beginning twelve (12) months after the Effective Date (the
“Service Level Improvement Date”) and on each anniversary of the Service Level
Improvement Date, at Health Net’s request the Service Levels shall be adjusted
by an amount equal to *** of the difference between the then-current Service
Levels and Supplier’s actual performance, as defined below, for such Service
Levels). As used in this Section 5.4, “Supplier’s actual performance” means the
monthly average of the performance achieved by Supplier during the immediately
preceding twelve (12) month period. In no event shall an adjustment pursuant to
this Section result in a Service Level that is not as favorable to Health Net as
the Service Level was prior to such adjustment. Notwithstanding the foregoing,
Continuous Improvement shall not apply to the following Service Levels;

 

  (a) Service Level 17: Response Time, Help Desk Average Time to Answer, and

 

  (b) Service Level 19: Response Time, Help Desk Average Call Abandonment Rate.

 

  5.5 Annual Meeting to adjust Service Levels.

Subject to Section 5.4, Health Net and Supplier will meet to review the Service
Levels on an annual basis to discuss the Service Levels and will make
adjustments to the Service Levels as mutually agreed to reflect improved
performance capabilities associated with advances in technology, processes,
methods and tools. As new technologies, processes methods and tools are
introduced, additional Service Levels reflecting industry best practices for
those technologies and processes will be established by the Parties in
accordance with the Change Control Process.

 

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SCHEDULE C

CHARGES

 

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SCHEDULE C

CHARGES

Table of Contents

 

1.

  

Introduction

   4

2.

  

Definitions

   4

2.1

  

Certain Definitions

   4

2.2

  

Other Terms

   5

3.

  

Transition and Transformation

   5

3.1

  

Transition

   5

3.2

  

Charges for Services Payable During Transition

   6

3.3

  

Transformation

   6

4.

  

Annual Services Charge

   7

4.1

  

Annual Services Charge

   7

4.2

  

ARCs/RRCs

   8

4.3

  

Deadbands on ARC/RRCs

   8

4.4

  

Adjustments to Resource Volumes

   10

4.5

  

Minimum Commitment

   11

5.

  

Projects

   12

5.1

  

Project Defined

   12

5.2

  

Baseline Project Pool

   12

5.3

  

Project Management

   14

6.

  

Hardware Services Charges

   14

6.1

  

Introduction

   14

6.2

  

Adjustments to the ASC for the Hardware Services Charges

   14

6.3

  

Calculation of Actual HSC Expenditures

   15

6.4

  

Charges Following Expiration of Lease Term

   16

6.5

  

Removal of HSC Equipment

   16

6.6

  

Server Refresh

   17

6.7

  

Procurement Process

   17

7.

  

Other Charges, Credits and Terms

   18

7.1

  

Managed As Pass-Through Expenses and Pure Pass-Through Expenses

   18

7.2

  

New Services

   18

7.3

  

Time and Materials Charges

   18

7.4

  

Disaster Recovery

   18

7.5

  

Taxes

   18

8.

  

Adjustments To Charges

   18

8.1

  

Cost of Living Adjustment (COLA)

   18

8.2

  

Currency

   20

8.3

  

Onshore / Offshore Support Models

   20

8.4

  

Extraordinary Events

   20

8.5

  

Late Fees

   21

8.6

  

Service Level Credits

   21

8.7

  

Benchmarking

   21

8.8

  

Substitute Services

   21

8.9

  

Price Reduction Due to Termination of a Service Tower

   22

 

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9.

  

Financial Responsibility for Equipment, Software, Facilities and Third Party
Services

   22

10.

  

Termination and Disengagement Assistance Charges

   22

10.1

  

Termination of this Agreement or a Service Tower

   22

10.2

  

Wind Down Costs

   23

10.3

  

End of Term Buy-Out Obligation

   25

11.

  

Purchase of Health Net Assets and Prepayments

   26

11.1

  

Purchase of Health Net Assets

   26

11.2

  

Reimbursement of Prepayments

   27

12.

  

System Change

   27

13.

  

Conversion of Capacity Billing to Utilization Billing

   27

Table of Exhibits

 

Exhibit C-1 – Resource Units

 

Exhibit C-2 – Resource Baselines

 

Exhibit C-3 – Annual Services Charge

 

Exhibit C-4 – ARC/RRC Rates

 

Exhibit C-5 – T&M Rates

 

Exhibit C-6 – Managed Pass-Through Expenses and Pure Pass-Through Expenses

 

Exhibit C-7 – Form Invoice

 

Exhibit C-8 – Termination Charges

 

Exhibit C-9 – IMAC Counting Rules

 

Exhibit C-10 – Joint Verification Process

 

Exhibit C-11 – ITG Infrastructure Budget

 

 

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SCHEDULE C

CHARGES

 

1. INTRODUCTION

This Schedule C describes the methodology for calculating the Charges for the
Services provided by Supplier to Health Net under this Agreement. The annual
services charge described in Section 4.1 (“Annual Services Charge” or “ASC”), as
adjusted by Additional Resource Charges (“ARCs”) and Reduced Resource Credits
(“RRCs”) and the HSC adjustment described in Section 6; charges for
Transformation described in Section 3; Managed As Pass-Through Expenses and Pure
Pass-Through Expenses described in Section 7.1; charges for Projects and New
Services described in Sections 5 and 7.2; any Out-of-Pocket Expenses payable
under this Agreement; and any other charges or adjustments (e.g., COLA)
expressly provided for in the Agreement (collectively, the “Charges”) shall
fully compensate Supplier for providing the Services. There are no additional
amounts payable by Health Net under this Agreement.

 

2. DEFINITIONS

 

2.1 Certain Definitions

(a) “Annual Services Charge” or “ASC” has the meaning given in Section 1.

(b) “ARC/RRC Rate” for each Resource Unit means the corresponding Resource Unit
charge set forth in Exhibit C-4.

(c) “Charges” has the meaning given in Section 1.

(d) “Contract Year” has the meaning given in Section 2.1(i) of the General Terms
and Conditions.

(e) “Financial Responsibility” means having responsibility for paying for
resources or certain services related to resources, as indicated in the
Financial Responsibility Model set forth in Schedule S.

(f) “Financial Responsibility Model” means a matrix that identifies the
Financial Responsibility of each Party for certain assets, as set forth in
Schedule S.

(g) “FMV” or “Fair Market Value” means what a willing buyer would pay a willing
seller for an asset, neither being under any compulsion or financial distress.

(h) “ITG Infrastructure Budget” means those items from Health Net’s IT budget
identified in Exhibit C-11.

(i) “Project Charges” means any Charges payable under Section 5.

(j) “Projects” has the meaning given in Section 5.1.

(k) “Resource Baseline” has the meaning given in Section 4.1.

(l) “Resource Category” means any grouping of service delivery resources for
which distinct volumes are measured and charging rates or other charging
mechanisms apply. Resource

 

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Categories may be added from time to time by mutual agreement of the Parties,
and appropriate adjustments will be made to the existing or new Resource
Baselines, as applicable. The Resource Categories and are set forth in Exhibit
C-1 to this Schedule C.

(m) “Resource Unit” or “RU” for any Resource Category means the unit of
chargeable resource utilization within such Resource Category. Each RU is listed
and defined in Exhibit C-1.

(n) “Service Commencement Date” has the meaning given in Section 2.1(y) of the
General Terms and Conditions.

(o) “Service Tower” means the Charges, and the Services corresponding to such
Charges, for the following groupings of Services:

(i) Cross Tower Services, which mean those Services described in Section 2 of
Exhibit C-1;

(ii) Mainframe and AS400 Services, which mean those Data Center Services that
relate to systems operating on the zSeries and iSeries (i.e., AS400) platforms
as set forth in Section 3 of Schedule A;

(iii) Server Services, which mean those Data Center Services other than the
Mainframe and AS400 Services;

(iv) Help Desk Services, as defined in Schedule A;

(v) End User Services, as defined in Schedule A;

(vi) Data Network Services, as defined in Schedule A; and

(vii) Voice Network Services, as defined in Schedule A.

(p) “T&M Rates” has the meaning given in Exhibit C-5.

(q) “Transitioned Employees” has the meaning given in Section 2(o) of Schedule
E.

(r) “Transition Period ASC” has the meaning given in Section 3.2.

(s) “Work Order” has the meaning given in Section 1.2(a) of Exhibit A-10.

 

2.2 Other Terms

Capitalized terms used in this Schedule C but not defined herein have the
meanings given in the Glossary attached as Schedule U or elsewhere in this
Agreement.

 

3. TRANSITION AND TRANSFORMATION

 

3.1 Transition

Except as provided in Sections 3.2, 3.3 and 5.2(f), for any Wind Down Costs
payable under Section 10.2, and for any Charges agreed upon by the Parties
through the Change Control Process, there

 

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are no charges payable by Health Net for (a) performance of the Transition; or
(b) any Services provided by Supplier prior to the Service Commencement Date.

 

3.2 Charges for Services Payable During Transition

(a) The Charges payable by Health Net for Services prior to the Service
Commencement Date consist solely of (1) the ASC specified in Exhibit C-3 for
Transition (“Transition Period ASC”); and (2) the Transformation Charges payable
prior to the Service Commencement Date pursuant to Section 3.3.

(b) Notwithstanding anything to the contrary in this Agreement, the Transition
Period ASC is a fixed charge that shall not be adjusted by ARCs and RRCs, except
ARCs and RRCs shall be determined in accordance with Section 4.2 during the
Transition Period for Resource Units: (i) within the Transport Resource
Categories (defined in Section 6 of Exhibit C-1); or (ii) (A) within the IT MRC
Towers, that are the result of the addition or elimination of Equipment above or
below that which existed as of the Effective Date and (B) within the Network MRC
Towers, subject to 3.2 (b)(i) ***, for utilization of Resource Units *** the
applicable Resource Baselines (the “Network Transition Deadband”).

(c) Beginning on the Effective Date, each Party shall have Financial
Responsibility for Third Party Service Contracts, Software and Equipment as
specified in Schedules I, J and N, respectively, and Schedule S.

 

3.3 Transformation

(a) Exhibit C-3 provides the non-recurring Charges payable in calendar years
2008 and 2009 for the data center migration and other Transformation Services
described in Exhibits A-3 (Solution Description) and A-4 (Transition and
Transformation Plan), such charges the “Transformation Charges”.

(b) During the Transformation, Supplier shall undertake to convert physical
Wintel Images to virtual Wintel Images. Such conversion shall be at Supplier’s
cost and expense, and there shall be no additional charges payable by Health Net
in connection with such conversion, including any ARCs, hardware, software
(including VMware) or labor charges, nor will any Project Hours or Small
Projects (as defined in Section 5 below) be charged or used in connection with
such conversion.

(c) Supplier shall invoice Health Net for the Transformation Charges as provided
below in this Section 3.3(c). Health Net shall pay such invoice within thirty
(30) days after receipt, subject to Section 3.3(c)(ii).

(i) Supplier shall invoice Health Net for the Transformation Charges in the
months and amounts set forth in Exhibit C-3.

(ii) Within sixty (60) days of the Effective Date, the Parties shall mutually
agree on the acceptance criteria for completion of the Transformation and the
Health Net dependencies as set forth in Attachment A-3-1. Health Net shall have
the right to withhold payment of the final monthly installment of the
Transformation Charge *** set forth in Exhibit C-3 until Supplier completes the
Transformation in accordance with the acceptance criteria agreed upon by the
Parties.

 

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4. ANNUAL SERVICES CHARGE

This Section 4 describes the Annual Services Charge and the ARC/RRC methodology
that shall be used to adjust the Annual Services Charge to account for Resource
Unit utilization over or under the Resource Baselines.

 

4.1 Annual Services Charge

(a) The “Resource Baseline” for each Resource Category means the quantity of RUs
that as of the Effective Date the Parties anticipate Health Net will utilize
each Contract Year within such Resource Category. The Resource Baselines for
each Resource Category are set forth in Exhibit C-2. Certain of these Resource
Baselines are subject to adjustment as part of the Joint Verification Process
described in Exhibit C-10.

(b) The Annual Services Charge set forth in Exhibit C-3 shall fully compensate
Supplier for providing and supporting the volume of RUs set forth in the
Resource Baselines. If the quantity of RUs consumed by Health Net within any
Resource Category in any month is more or less than the quantity of RUs
specified in such Resource Baseline, an ARC or RRC, respectively, shall be
applicable as provided in Section 4.2, except as provided otherwise for
particular Resource Units (e.g., RUs subject to deadbands under Section 4.3) or
in particular circumstances (e.g., during Transition as provided in
Section 3.2(b)). The ARCs represent compensation for the additional related
Services provided. The RRCs represent credits for under-utilization of the
related Services.

(c) Beginning on the Effective Date and continuing until the Service
Commencement Date, Supplier shall invoice Health Net in accordance with
Section 10 of the General Terms and Conditions and Section 4.1(d)(i) and
(ii) below for 1/6 of the Transition Period ASC, net of any ARCs and RRCs
(subject to Section 3.2(b)).

(d) Beginning after the Effective Date, Supplier shall (in each case in
accordance with the payment terms under Section 10 of the General Terms and
Conditions):

(i) For the period from the Effective Date to September 30, 2008, create and
deliver to Health Net on or before September 10, 2008 an invoice equal to
one-sixth (1/6th) of the Transition Period ASC for Contract Year 1 for the
September 2008 Services, plus an amount for the partial month of August 2008
equal to 12/31st or 38.7% of the September 2008 Transition Period ASC charge
defined above (which fraction and percentage assume an Effective Date of
August 19, 2008); and

(ii) For the calendar month of February 2009, given that the period during which
the Transition Period ASC is to be charged pursuant to Section 4.1(c) above ends
during such month (e.g., February 15th if the Effective Date is August 19th),
the invoice for February 2008 shall be calculated as (1) the total Transition
Period ASC minus all Transition Period ASC invoiced to Health Net since the
Effective Date (for example, ***), plus (2) an amount for the remainder of
February 2009 equal to the actual number of days remaining in February divided
by twenty-eight (i.e., the number of days in February 2009) times one-twelfth
(1/12th) of the ASC for Contract Year 1 (net of any applicable ARCs and RRCs and
HSC Adjustments); and thereafter,

(iii) invoice Health Net in accordance with Section 10 of the General Terms and
Conditions for 1/12 of the Annual Services Charge for the applicable Contract
Year each month, net of any applicable ARCs and RRCs and HSC Adjustments, except
for

 

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(iv) the final partial month of the Agreement (unless otherwise terminated
earlier in accordance with the Agreement) in which case the ASC charge for such
month shall be proportionally reduced to reflect only the actual number of days
the Services are provided.

(e) For the avoidance of doubt, all fees, taxes, and expenses associated with
and resulting from the disposal of Health Net Owned Equipment and Health Net
Leased Equipment pursuant to Sections 2.25(b) and (c) of Schedule A shall be
included the ASC, and Supplier may not charge Health Net any additional amounts
for such fees, taxes and expenses provided (1) at the time of disposal Health
Net will convey ownership to such Equipment it identifies for disposal to
Supplier without any charges, payments or other obligations of Supplier (in
which event Supplier shall accept such conveyance), and (2) Supplier is entitled
to retain without any obligation to Health Net, any proceeds from Supplier’s
subsequent sale (or reduction in disposal fees) related to Health Net Owned
Equipment and Health Net Leased Equipment that Health Net conveys to Supplier in
advance of disposal of such Equipment.

 

4.2 ARCs/RRCs

In the month immediately following the Effective Date, and each month
thereafter, Supplier shall adjust the Annual Services Charges using ARCs and
RRCs, as they may apply, to reflect Health Net’s actual usage of Services in
accordance with the following:

(a) Supplier shall track the number of RUs actually utilized by Health Net each
month within each Resource Category and provide such information with the
subsequent month’s invoice.

(b) Except as provided otherwise in this Agreement (e.g., Sections 3.2(b) and
4.3), ARCs and RRCs shall be calculated each month as follows:

(i) If the quantity of RUs consumed by Health Net in a month for a Resource
Category is greater than the volume of RUs set forth in the Resource Baseline
for such Resource Category and month, then Health Net will be charged an ARC
equal to the product of the ARC/RRC Rate for such Resource Category multiplied
by the number of RUs actually used by Health Net within such Resource Category
in excess of the RUs set forth in the applicable Resource Baseline.

(ii) If the quantity of RUs consumed by Health Net in a month for a Resource
Category is less than the volume of RU’s set forth in the Resource Baseline for
such Resource Category and month, then Health Net will receive a RRC equal to
the product of the ARC/RRC Rate for such Resource Category multiplied by the
difference between the number of RUs actually used by Health Net within such
Resource Category and the RUs set forth in the applicable Resource Baseline.

(c) The ARC/RRC Rates for each Resource Category are set forth in Exhibit C-4.

 

4.3 Deadbands on ARC/RRCs

(a) Help Desk Calls. During the Term, no ARCs or RRCs shall apply within the
Help Desk Calls Resource Category during a month unless Health Net’s actual
usage of RUs within such Resource Category varies by more than *** above or
below the corresponding Resource Baseline in such month (the “Help Desk Call
Deadband”).

(i) If Health Net’s actual RU usage within the Help Desk Calls Resource Category
during a month is more than *** above the corresponding Resource Baseline, then
Health Net will be charged an ARC equal to the product of the ARC/RRC Rate for
such Resource Category multiplied by

 

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the number of RUs actually used by Health Net within such Resource Category in
excess of the Help Desk Call Deadband.

(ii) If Health Net’s actual RU usage within the Help Desk Calls Resource
Category during a month is more than *** below the corresponding Resource
Baseline, then Health Net will receive a RRC equal to the product of the ARC/RRC
Rate for such Resource Category multiplied the number of RUs actually used by
Health Net within such Resource Category below the Help Desk Call Deadband.

(b) Desktop IMACs. During the Term, no ARCs shall apply within the Desktop IMACs
Resource Category during a month unless Health Net’s actual usage of RUs within
such Resource Category varies by more than *** above the corresponding Resource
Baseline in such month (“Desktop IMAC ARC Deadband”). If Health Net’s actual RU
usage within the Desktop IMACs Resource Category during a month is more than ***
above the corresponding Resource Baseline, then Health Net will be charged an
ARC equal to the product of the ARC/RRC Rate for such Resource Category
multiplied by the number of RUs actually used by Health Net within such Resource
Category in excess of the Desktop IMAC ARC Deadband.

(i) No RRCs shall apply within the Desktop IMACs Resource Category during a
month unless Health Net’s actual usage of RUs within such Resource Category is
less than the following (“Desktop IMAC RRC Deadband”):

 

Contract Year

  

Desktop IMAC RRC Deadband (per month)

2009

   ***

2010

   ***

2011

   ***

2012

   ***

2013

   ***

(ii) If Health Net’s actual RU usage within the Desktop IMACs Resource Category
during a month is below the corresponding Desktop IMAC RRC Deadband, then Health
Net will receive a RRC equal to the product of the ARC/RRC Rate for such
Resource Category multiplied by the number of RUs actually used by Health Net
within such Resource Category below the Desktop IMAC RRC Deadband.

(c) Mainframe DASD Deadband. During the Term, no ARCs shall apply to Charges
within the Allocated DASD Resource Category unless Health Net’s actual usage of
RUs within such Resource Category exceeds the greater of (i) “x” Mainframe
Gb-months (as defined in Section 2.3 of Exhibit C-1), where “x” Mainframe
Gb-months shall be determined by the Parties within thirty (30) days after the
Effective Date, and shall equal the capacity of the Mainframe DASD that was
installed as of the Effective Date; or (ii) the number of Mainframe Gb-months in
the Resource Baseline for such month (the “DASD Deadband”).

(i) If Health Net’s actual RU usage within the Allocated DASD Resource Category
during a month exceeds the Allocated DASD Deadband, then Health Net will be
charged an ARC equal to the product of the ARC/RRC Rate for such Resource
Category multiplied by the number of Mainframe Gb-months actually used by Health
Net in excess of the Allocated DASD Deadband.

 

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(ii) RRCs are payable in accordance with Section 4.2 for RUs within the
Allocated DASD Resource Category below the corresponding Resource Baseline.

(iii) The Parties acknowledge that Health Net has placed a large order for
Mainframe Allocated DASD Equipment from a third party prior to the Effective
Date. Notwithstanding anything to the contrary in this Agreement: (1) the lease
for such Equipment shall be classified in the applicable Exhibit to Schedule N
as a Managed In ASC contract for which Supplier has Financial Responsibility and
(2) the additional Mainframe Gb-month Resource Units added as a result of such
new Equipment, whether or not such new Equipment is installed as of the
Effective Date, shall not be factored into the DASD Deadband calculation set
forth in Section 4.3 (c) above (i.e., they will be charged as ARCs without
regard to a DASD Deadband).

(d) SAN/NAS Storage. During the Term, no ARCs shall apply to Charges within the
SAN/NAS Storage Resource Category unless Health Net’s actual usage of RUs within
such Resource Category exceeds the greater of (i) *** Gb-months; or (ii) the
number of SAN Gb-months in the Resource Baseline for such month (the “SAN
Storage Deadband”).

(i) If Health Net’s actual RU usage within the SAN Storage Resource Category
during a month exceeds the SAN Storage Deadband, then Health Net will be charged
an ARC equal to the product of the ARC/RRC Rate for such Resource Category
multiplied by the number of SAN Gb-months actually used by Health Net in excess
of the SAN Storage Deadband.

(ii) RRCs are payable in accordance with Section 4.2 for RUs within the SAN
Storage Resource Category below the corresponding Resource Baseline.

(e) Wintel System Images. During the Term, no RRCs shall apply within the Wintel
System Image Resource Category during a month unless Health Net’s actual usage
of RUs within such Resource Category is *** Wintel System Images (“Wintel System
Image Deadband”). If Health Net’s actual RU usage within the Wintel System Image
Resource Category during a month is below the corresponding Wintel System Image
Deadband, then Health Net will receive a RRC equal to the product of the ARC/RRC
Rate for such Resource Category multiplied by the number of RUs actually used by
Health Net within such Resource Category below the Wintel System Image Deadband.

(f) Novell Servers. During Contract Year One (1) only, no RRCs shall apply
within the Novell Server Resource Category during a month unless Health Net’s
actual usage of RUs within such Resource Category is *** Novell Servers (“CY1
Novell Server Deadband”). If Health Net’s actual RU usage within the Novell
Server Resource Category during a month is below the corresponding CY1 Novell
Server Deadband, then Health Net will receive a RRC equal to the product of the
ARC/RRC Rate for such Resource Category multiplied by the number of RUs actually
used by Health Net within such Resource Category below the CY1 Novell Server
Deadband.

 

4.4 Adjustments to Resource Volumes

(a) In managing its resources, Supplier shall maintain the flexibility to
respond to changes in Health Net’s demand for RUs on a day-to-day and
month-to-month basis, particularly with respect to those portions of the
Services for which Health Net experiences significant variances in demand.

(b) For those RUs where the Charges are based on capacity available to Health
Net (e.g., Installed MIPS), or the number of items of Equipment (e.g., number of
Desktop Workstations or Laptop Workstations), Supplier shall neither increase
nor decrease the volume of RUs without Health Net’s prior

 

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written approval. Health Net shall not be required to pay for any RUs added
without its prior written approval.

(c) For those RUs where the Charges are based on the number of items of
Equipment (e.g., number of Desktop Workstations and Laptop Workstations), if
Health Net requests that Supplier increase or decrease the number of RUs
(through the Help Desk or other procedure established by the Parties), ARCs and
RRCs shall be payable as follows unless the Parties agree otherwise as part of a
Project:

(i) If Health Net notifies Supplier of a desire to remove one or more Resource
Units from the scope of Services on or prior to the fifteenth (15th ) day of a
month, Supplier shall credit Health Net with the corresponding RRC (or reduction
in ARCs) in the current month (retroactive to the first (1st) day of the month).
If Health Net notifies Supplier of a desire to remove one or more Resource Units
from the scope of Services after the fifteenth (15th ) day of a month, Supplier
shall credit Health Net with the corresponding RRC (or reduction in ARCs)
beginning on the first (1st) day of the following month.

(ii) If Health Net notifies Supplier of a desire to add one (1) or more Resource
Units to the scope of Services, and Supplier installs such new Resource Units on
or prior to the fifteenth (15th) day of a month, Supplier shall begin charging
Health Net for the corresponding ARC in the current month (retroactive to the
first (1st) day of the month). If Health Net notifies Supplier of a desire to
add one (1) or more Resource Units to the scope of Services, and Supplier
installs such Resource Units after the fifteenth (15th) day of a month, Supplier
shall begin charging Health Net for the corresponding ARC on the first (1st) day
of the following month.

(iii) If the fifteenth (15th) day of a month is a Saturday, references to such
date shall be deemed references to the fourteenth (14th) day of the month; if
the fifteenth (15th) day of a month is a Sunday, references to such date shall
be deemed references to the sixteenth (16th) day of the month.

(d) For those RUs that are based on available capacity or actual RU utilization
by Health Net, ARCs and RRCs shall be determined based on available capacity or
actual RU utilization on the last day of the month, unless stated otherwise for
particular RUs in Exhibit C-1.

 

4.5 Minimum Commitment

(a) Exhibit C-3 sets forth minimum revenue commitments for each Contract Year of
the Term (each a “Minimum Commitment”) for (i) the combined Data Network and
Voice Network Service Towers (“Network MRC Towers”) and (ii) all Service Towers
other than the Data Network and Voice Network Service Towers (“IT MRC Towers”).
If the total Charges payable by Health Net under this Agreement within either
the Network MRC Towers or IT MRC Towers are (A) in a month between the Effective
Date and the Service Commencement Date, *** of the applicable Minimum Commitment
for such period; or (B) in a month after the Service Commencement Date, *** of
the applicable Minimum Commitment for the then current Contract Year, as a
result of Health Net’s decision to withdraw Services from this Agreement and
either perform them itself or use a third party to perform them, then Health Net
shall pay Supplier an additional amount equal to the difference between the
applicable Minimum Commitment for such month and the total Charges otherwise
payable by Health Net within such Network MRC Towers or IT MRC Towers, as
applicable, in such month under this Agreement. The Minimum Commitments shall be
prorated for partial months and Contract Years (as applicable to the above).

(b) If Health Net terminates a Service Tower pursuant to Section 16 of the
General Terms and Conditions, and pays all applicable Termination Charge and
Wind Down Costs payable for such termination under Section 10 of this Schedule
C, the Minimum Commitment for each Contract Year shall be reduced by an amount
proportionate to the percentage of the Annual Services Charge attributable to

 

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the terminated Service Tower for each Contract Year set forth in Exhibit C-3 as
of the Effective Date. For example, ***.

 

5. PROJECTS

 

5.1 Project Defined

(a) A “Project” is a work that is: (i) expressly designated as a Project in this
Agreement (e.g., In-Flight Projects), or (ii) a discrete unit of non-recurring
work outside the scope of Services described in this Agreement that has
deliverables and requires startup, planning, execution, and completion. For the
avoidance of doubt, if a Service is described in this Agreement (e.g., Equipment
Refresh or installation activities), and it is not expressly designated as a
Project, then it is not a “Project” for purposes of determining Charges under
this Section 5.

(b) A “Project Hour” means a productive hour of Project work for Health Net, as
appropriately recorded under Supplier’s labor tracking system, exclusive of
nonproductive time, such as holidays, vacation time, sick leave or other
personal time off, education, training, general travel, administrative and
management time (e.g., Supplier internal meetings not specific to an approved
Project, internal reporting, expense accounting), internal Supplier process
implementation work, and idle time between projects. Hours spent for transition
labor (i.e., skilled personnel brought in by Supplier to mentor Supplier
Personnel) shall not be counted as Project Hours.

(c) “Small Project” means a Project that requires *** Project Hours to complete.
Supplier’s performance of Small Projects, not to exceed *** Project Hours each
month (the monthly “Small Project Hours Cap”), is included in the Annual
Services Charge and shall not count toward the Baseline Project Pool. Project
Hours incurred performing additional Small Projects above the Small Projects
Hours Cap in any month during the Term shall count toward the Baseline Project
Pool. Supplier shall manage Small Projects so as not to impact delivery of
Services.

 

5.2 Baseline Project Pool

(a) The ASC includes a baseline of *** Project Hours that Supplier shall perform
each Contract Year in connection with Projects requested by Health Net
(“Baseline Project Pool”).

(b) Supplier shall perform Projects at no additional charge for Supplier
Personnel so long as:

(i) during any Contract Year the total Project Hours do not exceed *** Project
Hours (i.e., ***);

(ii) during any month the Project Hours do not exceed *** Project Hours;

(iii) the skills required for completion of the Projects are skills (A) required
to perform Services under this Agreement or (B) covered by a T&M Rate category
set forth in Exhibit C-5; and

(iv) the volume of network and non-network Project Hours applied against the
Baseline Project Pool approximates the ratio of Supplier Personnel assigned
between the Network MRC Towers and the IT MRC Towers (i.e., *** of Project Hours
in the Baseline Project Pool should be applied toward network-related Projects).

 

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(c) If at Health Net’s request Supplier performs Projects in excess of the
Baseline Project Pool thresholds provided in Section 5.2(b), the excess Project
Hours shall be separately chargeable at the T&M Rates set forth in Exhibit C-5.
Health Net and Supplier shall each use Commercially Reasonable Efforts to manage
and coordinate Projects so that additional Charges incurred by Health Net are
minimized.

(d) If in any quarter of a Contract Year Health Net does not use at least ***
Project Hours, Supplier shall provide Health Net with a credit in the following
month against the Annual Services Charge calculated as follows: [(*** Project
Hours – the actual number of Project Hours used by Health Net in the quarter) *
***], subject to the following:

(i) No later than ten (10) days prior to the beginning of each month the Parties
shall review the Health Net Project Pipeline to assess whether it contains a
volume of Projects sufficient to utilize at least *** Project Hours in such
month.

(ii) If the criteria in item (i) above is not met in a month, and in such month
Health Net actually utilizes less than *** Project Hours, then the “***” number
in the formula above for purposes of calculating credits at the end of a quarter
shall be reduced by the difference between (A) *** Project Hours and (B) the
greater of the actual number of Project Hours used in such month and the
estimated Project Hours required to perform the Projects in the Health Net
Project Pipeline for such month.

(iii) If Health Net suspends a Project for which a Work Order has been executed
for more than five (5) Business Days, or significantly reduces the scope of a
Project for which a Work Order has been executed in a month, and Supplier is
unable to redeploy the resources assigned to such Project to another Project in
the Health Net Project Pipeline, then the hours forecasted for such month for
such delayed or reduced Project shall be deducted from the “***” number in the
formula above for purposes of calculating credits at the end of a quarter.

(iv) Project Hours for which a credit was made to Health Net in accordance with
this Section 5.2(d) shall be deducted from the annual Project Hours available in
the Baseline Project Amount.

(v) “Health Net Project Pipeline” means all Projects: (A) that are in-progress
or for which a Work Order has been executed; or (B) for which Health Net has
provided Supplier with a Project Brief (defined in Exhibit A-10).

(e) Notwithstanding the foregoing, with respect to all or any portion of a
Project (whether or not in excess of the Baseline Project Pool), Health Net may
request that Supplier use existing resources who would otherwise be available to
provide Services hereunder to perform the Project without deduction from the
Baseline Project Pool or additional charge, provided that Supplier will be
excused from the Service Levels applicable to the Services from which the
existing resources were displaced, and further provided that Supplier continues
to use Commercially Reasonable Efforts to provide the Services in accordance
with this Agreement without the use of the redirected resources. The Parties
shall mutually agree as to which existing resources should be reallocated to
performance of the Project.

(f) The Baseline Project Pool shall apply beginning on the Service Commencement
Date. Prior to the Service Commencement Date, Supplier shall not charge Health
Net for Project Hours worked by Transferred Employees, but shall be allowed to
charge for incremental Supplier Personnel required during such period to perform
Projects that Health requests that cannot be performed by Transferred Employees.

 

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(g) For the avoidance of doubt, Health Net may not carry-over unused Project
Hours from the Baseline Project Pool from one Contract Year to the next.

 

5.3 Project Management

The Parties shall initiate, document, and manage Projects in accordance with
Exhibit A-10.

 

6. HARDWARE SERVICES CHARGES

 

6.1 Introduction

(a) The ASC contains an allocation of funds (“Hardware Services Charge” or
“HSC”) that shall be used to (i) refresh Equipment within the Server Services
Tower and (ii) purchase net new Equipment to accommodate growth (i.e., ARCs) in
Health Net Resource Units within the Server Services Tower (collectively “HSC
Equipment”). The HSC allocation included in the ASC for each Contract Year
quarter is set forth below in Section 6.1(b). Supplier shall obtain written
approval prior to purchasing any HSC Equipment or taking any action that impacts
the amount of Actual HSC Expenditure (defined below).

(b) The table below contains the HSC allocation referenced above in 6.1(a) for
each Contract Year. The quarterly HSC allocation used for the reconciliation
described in Section 6.2 shall equal *** of the applicable annual Contract Year
allocation in the table below.

 

    

Contract Year

    

CY1

  

CY2

  

CY3

  

CY4

  

CY5

  

Renewal

Term CYs

HSC Allocation (1)

   ***    ***    ***    ***    ***    ***

(1)    That portion of the HSC that pertains to the purchase of the Equipment
described in Items # 17, 18 and 19 of Exhibit A-1 (Refresh) is as follows:

 

•        Contract Year 1 = $***

 

•        Contract Year 2 = $***

 

•        Contract Year 3 = $***

 

•        Contract Year 4 = $***

 

•        Contract Year 5 = $***

 

6.2 Adjustments to the ASC for the Hardware Services Charges

Health Net may direct Supplier to use (or not use) the HSC to purchase HSC
Equipment from time to time during the Term. On a quarterly basis, the Parties
shall reconcile Health Net’s Actual HSC Expenditures with the HSC for the
quarter.

(a) If the Actual HSC Expenditures in a quarter exceed the HSC for that quarter,
in the following month Supplier shall invoice Health Net for the expenditure
above the HSC for that quarter.

(b) If the Actual HSC Expenditure in a quarter is less than the HSC for that
quarter, in the following month Supplier shall issue Health Net a credit equal
to the variance in expenditure below the HSC for that quarter.

 

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6.3 Calculation of Actual HSC Expenditures

(a) “Capital Expenditures” means, with respect to any month of the Term, the sum
of the Equipment suppliers’ charges for HSC Equipment (including all associated
peripheral equipment), operating system Software (when procured from the
Equipment supplier with the Equipment), applicable sales and use taxes (but
excluding personal property taxes), freight and, if applicable, the original
equipment manufacturers’ integration charges for such month.

(b) “Maintenance Charge” means, with respect to any month of the Term, the sum
of the Equipment suppliers’ charges for maintenance of the HSC Equipment (if
any).

(c) “Actual HSC Expenditures” means the monthly charges for HSC Equipment
acquisition and maintenance in a given month. The Actual HSC Expenditures for
each item of HSC Equipment will equal the following beginning on the date of
acquisition:

Actual HSC Expenditure = [P * [(i/12*(1+i/12)n)/((1+(i/12))n -1)] * 1.03] +
[(xx/12) * 0.5P] + M

Where:

P = the Capital Expenditures for that month;

M = the Maintenance Charge for that month;

“i” equals the Base Lease Interest Rate determined by the following:

(i) where n = 60 months, the “Base Lease Interest Rate” shall be ***%, included
in which is a “Swap Rate/Initial Index Rate” equal to ***%. The Base Lease
Interest Rate shall be adjusted prior to the beginning of each calendar quarter
by the difference between the Swap Rate/Initial Index Rate and the average of
the weekly two and three year swap rates published by the Federal Reserve Board
for the week preceding the Monday closest to 40 days prior to the start of the
next calendar quarter, and

(ii) where n = 48 months, the Base Lease Interest Rate shall be ***%, included
in which is a Swap Rate/Initial Index Rate” equal to ***%. The Base Lease Rates
shall be adjusted prior to the beginning of each calendar quarter by the
difference between the Swap Rate/Initial Index Rate and the average of the
weekly two year swap rates published by the Federal Reserve Board for the week
preceding the Monday closest to 40 days prior to the start of the next calendar
quarter.

Swap rates are published in Statistical Release H.15 and can be accessed via the
Federal Reserve Board internet website.

“xx” is the personal property tax rate at time of purchase;

“n” is the number of months in the applicable lease term; and

“1.03” is percentage charged above *** for all HSC Equipment purchased through
Supplier (i.e., *** Supplier procurement and administration).

 

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(d) Expenditures related to Equipment within the Server Services Tower that is
included in Health Net’s environment as of the Effective Date (including VMS
Equipment leases) are included in the ASC and shall not be considered Actual HSC
Expenditures.

 

6.4 Charges Following Expiration of Lease Term

There shall be no minimum or maximum period of installation for HSC Equipment.
If HSC Equipment is not Refreshed or removed from Health Net’s environment at
the end of the applicable lease term, Health Net shall continue to pay Supplier
for direct personal property taxes assessed upon Supplier for such HSC Equipment
and additional Maintenance Charges (if any) until such HSC Equipment is
Refreshed or removed. Any such personal property taxes and Maintenance Charges
paid by Supplier in a month shall be deemed Actual HSC Expenditures in such
month. Subject to the preceding sentences in this Section 6.4, Health Net shall
have no further Actual HSC Expenditures for any HSC Equipment not Refreshed or
removed from Health Net’s environment at the end of the applicable lease term.

 

6.5 Removal of HSC Equipment

Supplier shall remove HSC Equipment in a timely manner after receipt of a
request for removal from Health Net in accordance with Section 4.4(c) of
Schedule C. If Health Net requests removal of HSC Equipment prior to expiration
of the applicable lease term, Supplier shall use Commercially Reasonable Efforts
to re-deploy such HSC Equipment within Health Net or Supplier. If redeployment
is not possible, the Parties shall allocate responsibility for any remaining
Actual HSC Expenditures for that HSC Equipment as follows:

(a) Each month Supplier shall determine:

(i) the sum of the Actual HSC Expenditures, for the remaining lease terms, for
any HSC Equipment that Health Net removes in that month and that cannot be
redeployed within Health Net or Supplier (“Stranded HSC Costs”); and

(ii) the sum of the Actual HSC Expenditures, for the remaining lease terms, for
all HSC Equipment in Health Net’s environment that month (including the removed
HSC Equipment) (“Remaining HSC Expenditures”).

Example #1: assume Health Net has 10 servers, and that 5 of those servers have
Actual HSC Expenditures of $100/month and remaining lease terms of 15 months
(group A) and the other 5 have Actual HSC Expenditures of $200 and remaining
lease terms of 10 months (group B). If Health Net removes 1 server from Group A
and 1 from Group B and Supplier is unable to redeploy such servers, the Stranded
Lease Costs would be $***].

(b) If in a given month the Stranded HSC Costs are *** the Remaining HSC
Expenditures (“***”), Supplier shall be responsible for such Stranded HSC Costs
(and the costs associated with the removed HSC Equipment shall no longer be
considered Actual HSC Expenditures).

(c) If in a given month the Stranded HSC Costs are more than the ***:

(i) Supplier shall be responsible for such Stranded HSC Costs up to the *** (and
the costs associated with the removed HSC Equipment shall no longer be
considered Actual HSC Expenditures); and

 

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(ii) Health Net shall be responsible for such Standard HSC Costs in excess of
the ***. Health Net may elect to continue paying the monthly Actual HSC
Expenditures for such Stranded HSC Costs or direct Supplier to exercise any
buy-out or termination rights and reimburse Supplier for the associated costs.
If Health Net elects to continue paying the monthly Actual HSC Expenditures,
Supplier shall store the corresponding Equipment until it can be redeployed on
the Health Net account or Health Net directs otherwise. If Health Net directs
Supplier to buy-out Equipment and reimburses it for the cost as provided above,
upon request from Health Net, Supplier shall transfer ownership of such
Equipment to Health Net at no additional charge.

Example #2: Assuming the same facts as Example #1 above, ***% of the Remaining
HSC Expenditures is $1,750 and the Stranded HSC Costs are $3,500. Supplier would
be responsible for $*** of such costs; Health Net would be responsible for the
remaining $***.

(d) The calculations described above in this Section 6.5 shall be made each
month (i.e., the Remaining HSC Expenditures and the *** will be determined
without taking into account Stranded HSC Costs and HSC Equipment removed from
Health Net’s environment in prior months).

 

6.6 Server Refresh

Exhibit A-1 sets forth a Refresh schedule for Equipment within the Server
Services category. If Health Net (a) directs Supplier to delay the Refresh of
Server Equipment and (b) is unable or unwilling to purchase hardware maintenance
for such Server Equipment, and as a result Supplier is reasonably likely to have
difficulty meeting applicable Service Levels covering such Server Equipment,
then Supplier shall so notify Health Net. If after receiving such notice Health
Net does not authorize Supplier to Refresh or purchase hardware maintenance (if
available) for such Server Equipment, then Supplier shall be excused from the
requirement to meet applicable Service Levels for such Server Equipment solely
to the extent such Service Levels are affected by the Server Equipment’s
performance failure (i.e., not due to Supplier’s performance of or failure to
perform the Services).

 

6.7 Procurement Process

(a) Supplier shall use all Commercially Reasonable Efforts to obtain the best
price available for HSC Equipment, including by leveraging Supplier enterprise
and alliance agreements and obtaining bids from multiple suppliers for orders of
multiple items.

(b) If Health Net is able to obtain and make available to Supplier commercial
prices or terms and conditions for HSC Equipment that are more favorable than
those commercial prices or terms and conditions offered by Supplier, Supplier
will procure the applicable HSC Equipment using Health Net’s more favorable
prices or terms and conditions. Health Net must notify Supplier in writing in
advance of the placement of any order (provided the order has been previously
approved by Health Net) for which Health Net directs Supplier to use Health
Net’s more favorable prices or terms and conditions. Alternatively, Health Net
may elect to lease such HSC Equipment directly from a third party. In the latter
case, at Health Net’s option, the leases Health Net executes will be categorized
as Managed In ASC or Managed As Pass-Through contracts, subject to any
limitations in such leases.

 

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7. OTHER CHARGES, CREDITS AND TERMS

 

7.1 Managed As Pass-Through Expenses and Pure Pass-Through Expenses

(a) The list of Managed As Pass-Through Expenses and Pure Pass-Through Expenses
existing as of the Effective Date is attached to this Schedule as Exhibit C-6.
The cost for Supplier administering Managed As Pass-Through Expenses and Pure
Pass-Through Expenses is included in the Annual Services Charges and there shall
be no additional charge for administering such expenses.

(b) Supplier shall track and use all Commercially Reasonable Efforts to obtain
for Health Net all rebates, credits, and other monetary benefits to which Health
Net is entitled with respect to Managed As Pass-Through Expenses only.

 

7.2 New Services

The Charges for any New Services performed by Supplier at Health Net’s request
shall be calculated in accordance with Section 3.8 of the General Terms and
Conditions.

 

7.3 Time and Materials Charges

Exhibit C-5 contains hourly personnel rates (“T&M Rates”) that shall be used to
calculate Charges for Projects (outside the Baseline Project Pool) and any other
Services that this Agreement expressly specifies are to be charged on a time and
materials basis or otherwise using the rates in Exhibit C-5. Supplier shall
obtain Health Net’s written approval prior to incurring any time and materials
charges.

 

7.4 Disaster Recovery

The Charges for all disaster recovery Services described in this Agreement as of
the Effective Date are included in the Annual Services Charge. The impact of
changes to such Services shall be evaluated through the Change Control Process.

 

7.5 Taxes

Supplier shall invoice Health Net for taxes payable by Health Net as provided in
Section 9.3 of the General Terms and Conditions.

 

8. ADJUSTMENTS TO CHARGES

 

8.1 Cost of Living Adjustment (COLA)

(a) Each calendar year beginning January 1, 2010 Supplier shall have the right
to increase (i) the Annual Services Charge, (ii) the ARC/RRC Rates, and
(iii) the T&M Rates (collectively, the “Adjustable Charges”) using the Inflation
Factor defined below (each adjustment, a “COLA”). Supplier shall not increase
the Adjustable Charges prior to January 1, 2010.

(b) Subject to Section 8.1(d) below, the “Inflation Factor” for each calendar
year beginning in 2010 shall be equal to *** times the percentage increase in
the Consumer Price Index (rounded to two digits to the right of the decimal
point) from December 31, 2008 (the “Base Year Index”) to December 31 of the year
immediately preceding the year in which the COLA is to be made. If the Inflation
Factor is a negative number, no adjustment shall be made. In calculating
adjustments hereunder, the Inflation Factor shall be applied to the Adjustable
Charges as set forth in this Agreement on the Effective Date.

 

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Example #1 (2010 Adjustment): ***.

Example #2 (2011 Adjustment): ***.

(c) If the Parties add a New Service or new Service Tower or additional Charges
through the Change Control Process to this Agreement after the Effective Date
that is subject to a COLA, (i) the COLA shall be made using the formula above
and (ii) the Base Year Index shall equal the Consumer Price Index existing on
the last day of the month in which such New Service or new Service Tower was
added, unless the Parties specify otherwise in the applicable amendment or other
contract document adding such New Service or new Service Tower.

(d) The inflation sensitivity percentage applied to the Consumer Price Index
(i.e., ***%) to determine the Inflation Factor in Section 8.1(b) is a blended
percentage that assumes all Service Towers in effect as of the Effective Date
remain in effect during the Term. If (i) Health Net terminates one or more
Service Towers in accordance with the terms of this Agreement; (ii) the Parties
agree to add one or more new Service Towers; or (iii) Health Net declares an
Extraordinary Event under Section 8.4, then Supplier shall recalculate the
inflation sensitivity percentage based upon the relative Supplier labor
component in the Service Towers remaining after one (1) or more of the events in
items (i) through (iii) above occurs. Supplier shall present such revised
inflation sensitivity percentage to Health Net, together with reasonably
detailed supporting data and calculations to enable Health Net to evaluate
Supplier’s determination. Upon mutual agreement to the revised percentage, the
Parties shall document such revised percentage (which may be lower than or
higher than the inflation sensitivity percentage as of the Effective Date or any
amended percentage thereafter) in an amendment to this Schedule C. If the
Parties are unable to agree on a revised inflation sensitivity percentage after
one (1) or more of the events in items (i) through (iii) above occurs, then the
revised percentage shall be calculated using the following percentages and the
relative value of the ASC for each Service Tower at the time the triggering
event occurs.

(i) Cross Tower Services: ***%

(ii) Mainframe and AS400 Services: ***%

(iii) Server Services: ***%

(iv) Help Desk Services: ***%

(v) End User Services: ***%

(vi) Data Network Services: ***%

(vii) Voice Network Services: ***%

(e) If Supplier desires to exercise the right to increase the Adjustable Charges
for any year pursuant to this Section 8, it shall give Health Net notice of such
estimated COLA increase at least thirty (30) days prior to the beginning of such
year, including detailed calculations and supporting documentation as to the
determination of the Inflation Factor and the resulting changes to the Charges
for such year. The actual COLA shall be determined in January beginning in 2010
and each year thereafter, and any such COLA increase shall be included in
Supplier’s January invoice.

 

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(f) “Consumer Price Index” means the unadjusted Consumer Price Index (“CPI-U”),
as published in the “Summary Data from the Consumer Price Index News Release” by
the Bureau of Labor Statistics, U.S. Department of Labor, For All Urban
Consumers, All Cities Average, All Items, 1982-84 = 100. If the Bureau of Labor
Statistics (or its successor agency) stops publishing the CPI-U or substantially
changes its content and format, the Parties will substitute another comparable
index published at least annually by a mutually agreeable source. If the Bureau
of Labor Statistics merely redefines the base year for the CPI from 1982-1984 to
another year, the Parties will continue to use the CPI-U, but will convert the
base year to the new base year by using an appropriate conversion formula.

(g) The Parties recognize that a hyper-inflationary environment would likely
have a negative effect on the value proposition to Health Net of Supplier’s
delivery of the Services. If in any year the increase in the CPI-U (measured
year by year) is greater than ***%), then, at Health Net’s request, Supplier
will create an action plan of potential areas of the Services that could be
eliminated or reduced as a means to offset such inflation impact. Upon mutual
agreement, the Parties will implement those action plans that may include a
reduction in the scope or quantity of the Services, and/or reduced Service
Levels to allow Health Net to offset such high inflation environment for the
period of time such situation is in effect.

 

8.2 Currency

All Charges in this Agreement are stated in U.S. Dollars, and shall be invoiced
by Supplier and paid by Health Net in U.S. Dollars.

 

8.3 Onshore / Offshore Support Models

Exhibit A-3 describes the support model that Supplier intends to utilize to
provide Services in support of Health Net’s Tricare contract (“Onshore Support
Model”), and any other Services for which Health Net requires a similar support
model as a result of regulatory or customer requirements. The ARC/RRC Rates in
Exhibit C-4 are blended rates that shall be used to adjust the ASC to account
for changes in utilization of Resource Units (e.g., Servers, Help Desk Calls)
supported by both Supplier’s standard solution in Exhibit A-3 and Supplier’s
Onshore Support Model. For example, if Health Net were to remove 10 Servers
requiring an Onshore Support Model and add 15 Servers requiring standard support
within the same Server Resource Category, the net impact would be 5 ARCs (i.e.,
10 RRCs and 15 ARCs).

 

8.4 Extraordinary Events

(a) An “Extraordinary Event” means (i) a circumstance (or series of related
circumstances) in which Health Net’s actual usage of the Services varies or is
expected to vary for at least *** consecutive months to the degree that it will
increase or decrease a Resource Baseline by more than plus or minus ***%) or
(ii) Health Net’s loss, or expected loss, of its Tricare contract with the U.S.
Government.

(b) If Health Net notifies Supplier of the occurrence of an Extraordinary Event,
subject to Section 8.4(e) below, the Charges and Resource Baselines (including
Annual Service Charges and ARCs/RRCs Rates as appropriate) shall be adjusted in
accordance with this Section 8.2. Supplier’s adjustment in resources used to
provide the Services shall be in accordance with a plan prepared by Supplier and
approved by Health Net or, in the absence of such plan, as reasonably requested
by Health Net. Only Health Net may declare an Extraordinary Event.

(c) As used in this Agreement, in connection with an Extraordinary Event:

 

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(i) “Targeted Resource Reductions” means those resources no longer required by
Supplier to provide the Services.

(ii) “Targeted Cost Reductions” means the costs (including appropriate indirect
and overhead costs) and related profit that can be eliminated or reduced as and
when the Targeted Resource Reductions are eliminated.

(iii) “Targeted Resource Additions” means those new or modified resources newly
required by Supplier to provide the Services.

(iv) “Targeted Cost Increases” means the costs (including appropriate indirect
and overhead costs) and a reasonable profit that would be incurred as and when
the Targeted Resource Additions are placed in service.

(d) Supplier shall use Commercially Reasonable Efforts to proceed to eliminate
the Targeted Resource Reductions as quickly as feasible and Supplier will
proceed to deploy the Targeted Resource Additions as quickly as feasible given
Health Net’s requirements. As the Targeted Resource Reductions are eliminated,
the Annual Services Charges shall be reduced by the full amount of the Targeted
Cost Reductions applicable to Targeted Resource Reductions, and any affected
Baselines and ARC/RRC Rates shall be equitably adjusted, as appropriate. As the
Targeted Resource Additions are placed into service, the base charges will be
increased by the full amount of the Targeted Cost Increases applicable to such
Targeted Resource Additions, and any affected baselines and ARC/RRC Rates shall
be equitably adjusted, as appropriate.

(e) The Parties initially shall attempt to agree on a reasonable basis upon
(i) the occurrence of an Extraordinary Event; (ii) Targeted Resource Reductions,
Targeted Cost Reductions, Targeted Resource Additions, and Targeted Cost
Increases; and (iii) the appropriate adjustment to Charges and the timing
thereof. If within sixty (60) days notice of the occurrence of an Extraordinary
Event under this Section 8.2, the Parties have not agreed upon the foregoing,
then at the initiative of either Party the issue shall be treated as a dispute
under Section 26 of the General Terms and Conditions.

 

8.5 Late Fees

Interest shall accrue on unpaid undisputed Charges in accordance with the
provisions of Section 10.2 of the General Terms and Conditions.

 

8.6 Service Level Credits

Supplier shall credit any Service Level Credits earned in a month against such
subsequent month’s Charges.

 

8.7 Benchmarking

The Charges may be adjusted as and to the extent provided by the benchmarking
process described in Section 9.4 of the General Terms and Conditions. In no
event will the benchmarking process result in an increase in the Charges.

 

8.8 Substitute Services

“Substitute Services” means Services, including New Services, which displace
existing Services. In any Supplier proposal for the provision of Substitute
Services, Supplier shall specify the reductions, in terms of amounts for each
category of Charges, which will be made to Health Net’s recurring Charges under
this Schedule C if Supplier deploys the Substitute Services. If Health Net
chooses to use Supplier

 

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to implement Supplier’s proposal for the Substitute Services, Supplier shall
make the reductions stated in its proposal.

 

8.9 Price Reduction Due to Termination of a Service Tower

If Health Net terminates a particular Service Tower in accordance with the terms
of this Agreement, the Annual Services Charge and any other Charges
corresponding to such Service Tower shall cease to apply on the effective date
of termination, subject to Health Net’s payment obligations for Disengagement
Assistance (if any) under Section 16.6(c) of the General Terms and Conditions.

 

8.10 Adjustments due to fact that ASC begins before First Contract Year

The Parties shall make such equitable adjustments as may be necessary so that
Health Net receives the benefit of Services covered by the ASC arising out of
the fact that Health Net will commence paying the ASC prior to the commencement
of the first Contract Year (as set forth in Section 4.1(d)(ii)). For example,
the Parties shall make such equitable adjustments as are necessary so that
Health Net receives the benefit of Project Hours included within the ASC for the
period during which Health Net is paying the ASC prior to the first Contract
Year. In addition, the Parties shall make such equitable adjustments as may be
necessary arising out of the fact that provisions set forth in this Schedule C
which rely on months, quarters and years, may actually be partial months,
quarters or years.

 

9. FINANCIAL RESPONSIBILITY FOR EQUIPMENT, SOFTWARE, FACILITIES AND THIRD PARTY
SERVICES

Schedule S includes a matrix that allocates Financial Responsibility for
Equipment, Software and Third Party Service Contracts.

 

10. TERMINATION AND DISENGAGEMENT ASSISTANCE CHARGES

 

10.1 Termination of this Agreement or a Service Tower

(a) The Termination Fees referenced in Sections 16.1(b) (Termination for
Convenience), 16.1(d)(Termination Following a Change of Control of Health Net),
16.1(e) (Termination Following a Change of Control of Supplier), 16.1(f)
(Termination in the Event of a Force Majeure), 16.1(g) (Termination for
Regulatory Change), and Section 16.1(h) of the General Terms and Conditions
shall equal:

(i) the Termination Fee set forth in Section 1 of Exhibit C-8, as reduced in
accordance with Sections 10.1(b) and 10.1(c) below; plus

(ii) Wind Down Costs (calculated pursuant to Section 1.2).

(b) The table below specifies the percentage of the Termination Fee set forth in
Section 1 of Exhibit C-8 that shall be payable if Health Net terminates this
Agreement or a Service Tower under Section 9.4(g)(iv), 16,1(b), 16.1(d),
16.1(e), 16.1 (f), 16.1(g), or Section 16.1(h)(Termination for Increase in
Taxes) of the General Terms and Conditions. Termination Fees are not payable in
any other circumstance.

 

Termination Event

(§ References are to General Terms and Conditions)

   Termination Fee  

Benchmarking under Section 9.4(g)(iv)

   *** %

 

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Termination Event

(§ References are to General Terms and Conditions)

   Termination Fee  

Termination for Convenience under Section 16.1(b)

   *** %

Termination for Change of Control of Health Net under Section 16.1(d)

   *** %

Termination for Change of Control of Supplier under Section 16.1(e)

   *** %

Termination in the Event of a Force Majeure under Section 16.1(f)

   *** %

Termination for Regulatory Change under Section 16.1(g)

   *** %

Termination for Increases in Taxes under Section 16.1(h)

   *** %

(c) If prior to termination of this Agreement Health Net has terminated one or
more Service Towers, the total Termination Fee for the entire Agreement set
forth in Section 1 of Exhibit C-8 shall be reduced by the amounts previously
paid for such terminations.

 

10.2 Wind Down Costs

This Section 10.2 describes how Wind Down Costs payable to Supplier under this
Agreement in connection with a termination pursuant to Section 16,1(b), 16.1(d),
16.1(e), 16.1(g), or Section 16.1(h) of the General Terms and Conditions shall
be calculated. Wind Down Costs are also payable if Health Net (1) terminates
this Agreement or a Service Tower pursuant to Section 9.4(g)(iv) of the General
Terms and Conditions following a benchmarking exercise, or (2) terminates this
Agreement pursuant to 16.1(f) of the General Terms and Conditions following a
force majeure event, but only for unaffected Service Towers terminated as a
result of a termination of the Agreement. Wind Down Costs are not payable in any
other circumstances.

(a) “Wind-Down Costs” consist exclusively of the following costs to the extent
they are documented and arise as a result of Health Net’s termination of a
Service Tower or this Agreement pursuant to Section 16,1(b), 16.1(d), 16.1(e),
16.1(f)(subject to clause (2) in the paragraph above),16.1(g), 16.1(h) or
Section 9.4(g)(iv) of the General Terms and Conditions:

(i) Third Party Costs. Wind Down Costs shall include any termination or other
fees that Supplier is contractually obligated to pay a third party in connection
with the termination of an Equipment lease (subject to Section 10.3), Software
license, Equipment or Software maintenance contract, or other agreement for
third party services that is used solely to provide the terminated Services
(each a “Third Party Cost”); provided, however with respect to the Network
Towers, such Third Party Costs shall be limited to amounts payable by AT&T
directly to a third party other than an AT&T Affiliate in connection with a
termination of this Agreement or a Service Tower. Other than as set forth above,
Third Party Costs shall not include any termination or other fees payable by
Supplier to AT&T. In each case, Supplier shall use Commercially Reasonable
Efforts to avoid incurring the Third Party Cost, including by:

 

  (A) working with Health Net to identify all commercially reasonable means to
avoid or minimize such Third Party Costs;

 

  (B) to the extent requested by Health Net, transferring any such Equipment,
Software, licenses, leases, contracts, and other agreements to Health Net
pursuant to Section 16.6 of the General Terms and Conditions;

 

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  (C) redeploying any remaining Equipment, Software, licenses, leases,
contracts, and other agreements within Supplier’s organization if, and as soon
as, commercially reasonable;

 

  (D) selling, canceling, or otherwise disposing of any Equipment, Software,
licenses, leases, contracts, and other agreements that cannot be redeployed; and

 

  (E) negotiating with the applicable third party to eliminate or reduce the
Third Party Costs to be incurred.

(ii) Supplier Owned Equipment. With respect to Equipment that: (A) is owned by
Supplier or its Subcontractors; (B) used by Supplier solely to provide the
terminated Services; (C) Health Net does not elect to purchase pursuant to
Section 16.6 of the General Terms and Conditions; and (D) after using
Commercially Reasonable Efforts, Supplier is not able to redeploy within
Supplier’s or its Subcontractors business within one-hundred twenty (120) days
of the effective date of termination, Wind Down Costs shall include the net book
value of such Equipment reflected in Supplier’s or its Subcontractors books on
the Last Day of Use (defined below), minus the Net Sales Proceeds if sold by
Supplier or its Subcontractors.

(iii) “Net Sales Proceeds” shall mean any amounts obtained by Supplier in
disposing of an Asset, less applicable taxes and transportation costs directly
incurred in connection with such disposal.

(iv) Supplier Employees. With respect to Supplier and Subcontractor employees
who (A) are primarily dedicated to providing the terminated Services as of the
Last Day of Use (“Eligible Supplier Employees”); (B) cannot be reassigned to
another account or elsewhere within Supplier within forty-five (45) days of the
Last Day of Use; and (C) do not accept an offer of employment with Health Net or
its designee prior to the Last Day of Use, Wind Down Costs shall include actual
severance payments made to Eligible Supplier Employees pursuant to the
then-current Supplier severance policy, provided that (1) such severance occurs
within one hundred twenty (120) days after the Last Day of Use, (2) the
severance payments made to such employees do not exceed those available to
similarly situated employees under the then-current Supplier or Subcontractor
severance policy; and (3) Health Net’s maximum obligation for severance to any
Eligible Supplier Employees shall not exceed *** weeks of salary (without uplift
for benefits); provided (x) the limitation in item (3) above shall not apply to
Eligible Supplier Employees who were Transitioned Employees and (y) the terms
set forth in Section 4.8(a) of Schedule E shall also take precedence over item
(2) above.

(v) Balance Sheet Items. Wind Down Costs shall include the amount of “Balance
Sheet Items” set forth in Exhibit C-8 on the effective date of termination.

(b) Exclusion of Certain Costs. If Supplier fails to fulfill its obligations
under this Agreement to make Equipment, Software, third party contracts or
Service Provider Personnel (or alternate equipment, software, third party
contracts or personnel acceptable to Health Net in its sole discretion)
available to Health Net and its designees for purchase, hiring, or other form of
transfer, then Health Net shall not be responsible for any Wind Down Costs
related to such Equipment, Software, third party contracts or Service Provider
Personnel.

(c) Duty to Mitigate. Supplier shall use all Commercially Reasonable Efforts to
mitigate the amount of Wind Down Costs payable by Health Net.

 

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(d) Partial Redeployment or Use. To the extent Equipment, Software, personnel,
or other resources can be redeployed or used for another purpose, as reasonably
determined by Supplier, but only to a partial extent, the Wind Down Costs to be
reimbursed by Health Net will be reduced in an equitable manner to reflect the
costs not absorbed by such partial redeployment or other use.

(e) Definition of Last Day of Use. Unless stated otherwise, all amounts used to
calculate Wind Down Costs shall be determined on the later of (i) the effective
date of termination or (ii) if the applicable Equipment, Software, personnel, or
other resource is used to provide Disengagement Assistance Services, as of the
date Supplier ceases to use such resource to provide Disengagement Assistance
Services (the “Last Day of Use”).

(f) Payment Terms. Supplier shall invoice Health Net for any Wind Down Costs
payable under this Section 10.2 as they are incurred by Supplier, provided that
all such Wind Down Costs must be invoiced within one hundred twenty (120) days
after the Last Day of Use of the Equipment, Software, personnel, or other
resources to which the Wind Down Costs relate. Health Net shall pay such
invoices in accordance with the terms of this Agreement.

(g) Estimates. Supplier will prepare an itemized list and estimate of the
potential Wind Down Costs (including a list of the Equipment, Software,
personnel, and agreements to which the Wind Down Costs relate) and deliver it to
Health Net within thirty (30) days after Supplier’s receipt of the notice of a
termination to which this Section 10.2 applies, and from time to time during the
Term as Health Net may request so that Heath Net may estimate Wind Down Costs
that may be payable at the time of such request.

(h) Supporting Documentation. Health Net shall not be responsible for Wind Down
Costs that are not substantiated with supporting documentation. Health Net shall
have the right to review such supporting documentation used by Supplier to
calculate Wind Down Costs pursuant to this Section 10.2.

 

10.3 End of Term Buy-Out Obligation

Upon expiration of this Agreement, or in connection with a termination event for
which Wind Down Costs are payable under Section 10.2, Supplier shall use
Commercially Reasonable Efforts to re-deploy HSC Equipment within Health Net or
Supplier. If redeployment is not possible, the Parties shall allocate
responsibility for any remaining Actual HSC Expenditures for that HSC Equipment
consistent with the process set forth in Section 6.5, as follows:

(a) As of the Last Day of Use, a determination shall be made of:

(i) the sum of the Actual HSC Expenditures, for the remaining lease terms, for
any HSC Equipment that cannot be redeployed within Health Net or Supplier (“End
Of Term Stranded HSC Costs”); and

(ii) the sum of the Actual HSC Expenditures, for the remaining lease terms, for
all HSC Equipment in Health Net’s environment (including the redeployed HSC
Equipment) (“End Of Term Remaining HSC Expenditures”).

(b) If the Stranded HSC Costs are ***% or less than the Remaining HSC
Expenditures (“End of Term ***”), Supplier shall be responsible for such
Stranded HSC Costs.

(c) If the Stranded HSC Costs are more than the End Of Term ***:

 

Schedule C    C - 25    Health Net / IBM Confidential

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Final Execution Version

 

(i) Supplier shall be responsible for such Stranded HSC Costs up to the End Of
Term 10% Deadband; and

(ii) Health Net shall be responsible for such Standard HSC Costs in excess of
the End Of Term ***. If requested by Health Net, Supplier shall exercise any
buy-out or termination rights in lease agreements covering such Stranded HSC
Costs, and Health Net shall reimburse Supplier for the associated costs and
Supplier shall transfer ownership of such Equipment to Health Net at no
additional charge.

 

11. PURCHASE OF HEALTH NET ASSETS AND PREPAYMENTS

 

11.1 Purchase of Health Net Assets

(a) If Health Net exercises its option under Section 11.2(b) of the General
Terms and Conditions to sell the Health Net Owned Equipment listed in Exhibit
N-1 on or after the Effective Date, the purchase price for such Health Net
Equipment shall be calculated by adjusting $***, which is the June 15th, 2008
Fair Market Value for such assets, in accordance with Section 11.1(a)(iv) below
(as adjusted, the “Asset Purchase Price”). The Asset Purchase Price shall be
revised to reflect the Fair Market Value of the Health Net Equipment and to
address any change in the list of the Health Net Equipment as follows:

(i) If the Parties determine that equipment designated as Health Net Owned
Equipment is Health Net Leased Equipment, then (A) the FMV of such Equipment
shall be deducted from the Asset Purchase Price; and (B) the lease for such
Equipment shall be classified as a Managed As Pass-Through contract, or retained
by Health Net and classified as a Retained contract, and the ASC shall be
equitably reduced to reflect the reduction in costs to be incurred by Supplier
as a result of the reclassification of such Equipment (e.g., reduced
depreciation expense).

(ii) If the Parties determine that equipment designated as Health Net Owned
Equipment does not exist, then (A) the FMV of such Equipment shall be deducted
from the Asset Purchase Price; and (B) the ASC shall be equitably reduced to
reflect the reduction in costs to be incurred by Supplier as a result of the
removal of such Equipment (e.g., reduced depreciation expense).

(iii) If the Parties identify equipment owned by Health Net that is either
(i) purchased with funds within the ITG Infrastructure Budget; or (ii) purchased
by the Health Net ITG but reimbursed by another Health net department or
division, then at Health Net’s option, such equipment shall be added to Schedule
N as Health Net Owned Equipment and (A) the FMV of such equipment shall be added
to the Asset Purchase Price; and (B) the ASC shall be equitably increased to
reflect the increase in costs to be incurred by Supplier as a result of the
addition of such Equipment (e.g., added depreciation expense).

(iv) In addition to the adjustments specified above, the Parties shall
recalculate the actual FMV of the Health Net Owned Assets to be sold to Supplier
on the date of sale and adjust the Asset Purchase Price accordingly. In such
event, the ASC shall be equitably increased or reduced to reflect the increase
or decrease in costs to be incurred by Supplier as a result of such change in
the Asset Purchase Price. For example, ***.

(b) All Health Net Owned Equipment that is transferred to Supplier shall be
added to Schedule N and classified as Assumed Equipment under Schedule S.

 

Schedule C    C - 26    Health Net / IBM Confidential

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11.2 Reimbursement of Prepayments

Each month Supplier shall issue a credit against the Charges in an amount equal
to the amortization of Health Net prepaid amounts (if any) for Equipment,
Software, or Third Party Service Contracts for which Supplier assumed Financial
Responsibility pursuant to the General Terms and Conditions. Such prepaid
amounts shall be calculated and agreed to by the Parties within one hundred
twenty (120) days after the Effective Date.

 

12. SYSTEM CHANGE

A “Systems Change” means a material change in the operating environment that
Supplier is managing to provide the Services. Each time, if any, that Supplier
makes a Systems Change (whether or not such change is initiated by Supplier or
requested by Health Net), Supplier shall perform a benchmark comparison, at a
reasonable and mutually agreed level of detail, between the amount of billable
resource units required by that operating environment to perform a
representative sample of the processing then currently being performed for
Health Net prior to the Systems Change and immediately after the Systems Change.
Health Net shall not be required to pay for increased RU usage due to a Systems
Change.

 

13. CONVERSION OF CAPACITY BILLING TO UTILIZATION BILLING

As of the Service Commencement Date, the Installed MIPS Resource Unit is a
measure of mainframe capacity available to Health Net (“Capacity Basis”). Upon
thirty (30) days notice to Supplier, Health Net may elect to convert from
receiving such Services on a Capacity Basis to receiving such Services on a
utilization basis (“Utilization Basis”). At any time during the Term after
making such election, upon thirty (30) days notice, Health Net may elect to
convert back to receiving such Services on a Capacity Basis. Health Net may
elect to convert from a Capacity Basis to a Utilization Basis or from a
Utilization Basis to a Capacity Basis for Installed MIPS no more than one
(1) time during the Term. All conversions made under this Section 13 shall be
price neutral to both Parties.

 

14. AVPN

The charges that Health Net pays under this Agreement for the same Services that
were being provided by AT&T to Health Net immediately prior to the Effective
Date under the AT&T VPN Service – Service Order Attachment between Health Net
and AT&T and executed by Health Net on October 15, 2007 (the “AT&T VPN
Attachment”), shall not exceed the charges for such services paid by Health Net
under the AT&T VPN Attachment immediately prior to the Effective Date.

 

15. NETWORK SERVICES

Supplier shall commence providing the network transport components of the Data
Network Services and the Voice Network Services as of the Effective Date, and
the charges for such Services during the Transition Period are included in the
charges set forth in the “Transition” column of Exhibit C-3 for the Data Network
Services and the Voice Network Services, subject to ARC/RRCs as described in
Section 3.2(b) of this Schedule C. The Resource Baselines that will be used to
compute the ARCs/RRCs, as applicable during the Transition Period, will be the
Resource Baselines that are applicable for Contract Year 1 for the Data Network
Services and Voce Network Services, which are as set forth in Exhibit C-2.

Concurrently with the execution of this Agreement, the Parties are entering into
that certain Interim Agreement Regarding AT&T-Health Net Contracts, pursuant to
which the Parties and AT&T have agreed to terminate certain Health Net-AT&T
contracts (or portions thereof) under which AT&T is providing services that will
be provided by Supplier under this Agreement. Pursuant to Section 6 of that
Agreement, Supplier agrees to provide a true-up credit to Health Net to reflect
any charges that Health Net may overpay as the result of the fact that the
applicable AT&T contracts continue beyond the Effective Date. Since Health Net
is entitled to the transport rates under this Agreement for the network
transport components of the Data Network Services and the Voice Network Services
as of the Effective

 

Schedule C    C - 27    Health Net / IBM Confidential

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Date, the Parties agree that such rates under this Agreement in effect as of the
Effective Date shall be used in performing such true up and calculating any
overpayment by Health Net.

 

Schedule C    C - 28    Health Net / IBM Confidential

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EXHIBIT C-1

RESOURCE CATEGORIES AND RESOURCE UNITS

***

 

Exhibit C-1    C-1 - 1    Health Net / IBM Confidential

--------------------------------------------------------------------------------

 

EXHIBIT C-2

RESOURCE BASELINES

***

 

Exhibit C-2    C-2-1    Health Net / IBM Confidential

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EXHIBIT C-3

ANNUAL SERVICE CHARGE

***

 

Exhibit C-3    C-3-1    Health Net / IBM Confidential

--------------------------------------------------------------------------------

EXHIBIT C-4

ARC /RRC RATES

***

 

Exhibit C-4    C-4-1    Health Net / IBM Confidential

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EXHIBIT C-5

TIME & MATERIALS RATES

***

 

Exhibit C-5    C-5-1    Health Net / IBM Confidential

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Final Execution Version

 

EXHIBIT C-8

TERMINATION CHARGES

***

 

Exhibit C-8    C-8-1    Health Net / IBM Confidential

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Final Execution Version

 

SCHEDULE D

KEY SUPPLIER POSITIONS

 

Schedule D    D-1    Health Net / IBM Confidential

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Final Execution Version

 

SCHEDULE D

KEY SUPPLIER POSITIONS

 

Key IBM Position

  

Part-Time or Full-Time

  

Initially Approved
Individual

  

Minimum Time Period of Tenure

Project Executive (PE)    Full-time    Fernando Morgan    See Note 1 below
Delivery Project Executive (DPE)    Full-time    Frank Kalupski    See Note 1
below Transition Manager    Full-time    Terry Wynne    Six (6) Months after the
Effective Date or completion of Transition, whichever is longer, with an
additional sixty (60) days of recall availability. Transformation Manager   
Full-time    See Note 2 below    Eighteen (18) Months after the Effective Date
or completion of Transformation whichever is longer, with an additional sixty
(60) days of recall availability.

Note 1: Individuals occupying these Key Supplier Positions shall not be removed
or replaced by IBM from such position for the following time periods: (1) For
the individual who is initially appointed to such position, for twelve
(12) months after completion of Transition, (2) for each individual who replaces
the initially appointed individual, for twelve (12) months after each such
individual is appointed to such position, and (3) no more than three
(3) individuals occupying the Key Supplier Positions to which this Note 1
applies may be removed or replaced within any twelve (12) month period after the
initial twelve (12) month period.

Note 2: In accordance with Section 7.4(b) of the General Terms and Conditions,
IBM shall propose individuals to occupy these Key Supplier Positions for Health
Net’s approval within thirty (30) days after the Effective Date, and the
approved individuals shall be appointed to fill these Key Supplier Positions
within sixty (60) days after the Effective Date.

Note 3: Health Net shall have the right to designate two additional full time
Key Supplier Positions to address Service quality concerns by giving written
notice to Supplier within ninety (90) days after the Effective Date.

 

Schedule D    D-2    Health Net / IBM Confidential

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SCHEDULE E

TRANSITIONED EMPLOYEES

 

Exhibit E-2    E-2 - 1    Health Net / IBM Confidential

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SCHEDULE E

TRANSITIONED EMPLOYEES

***

Table of Exhibits

 

Exhibit E-1  -  Affected Employees

Exhibit E-2  -  Employees on Approved Leave

***

 

Exhibit E-2    E-2 - 2    Health Net / IBM Confidential

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Final Execution Version

 

SCHEDULE F

FACILITIES

 

Schedule F    F - 1    Health Net / IBM Confidential

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Final Execution Version

 

SCHEDULE F

FACILITIES

 

1. INTRODUCTION

 

1.1 This Schedule F (Facilities) comprises the following three (3) lists of
Facilities:

 

  (a) a list of Health Net Facilities to which Supplier will provide the
Services as of the Effective Date and applicable Supplier space requirements;

 

  (b) a list of Supplier facilities from which Supplier plans to provide the
Services as of the Effective Date; and

 

  (c) a list of Approved Subcontractor facilities from which Approved
Subcontractors plan to provide the Services as of the Effective Date.

 

1.2 The Parties agree that the list attached hereto is subject to modification
during the Term pursuant to the change procedures of the Agreement.

 

2. Health net facilities

 

Site ID

  

General Facility Name

  

Facility Address

  

Facility Classification
(Campus Metro,
Remote)

  

Network Tier
Classifications

  

Supplier Space
Requirements

   Off Site/VPN          Tier 3   

CA002

CA003

CA251

CA325

   Aerojet   

2015, 2025, 2006, 2019

Aerojet Road Rancho

Cordova CA 95472

   Campus    Tier 1    CA030    Gold Point - Building A Hazel Data Center   

12033 Foundation Place

Rancho Cordova CA 95670

   Campus    Tier 1    From Effective Date: 2 offices w/lock, 45 cubes, 1 high
wall cube

 

Schedule F    F - 2    Health Net/IBM Confidential

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Final Execution Version

 

Site ID

  

General Facility Name

  

Facility Address

  

Facility Classification
(Campus Metro,
Remote)

  

Network Tier
Classifications

  

Supplier Space
Requirements

              

(Supplier would anticipate that these requirements may be reduced if re-badged
associates retain offices occupied prior to the Effective Date)

Additional During Transition: 1 office w/lock, 1 cube, use of a team room.,
depot service facility.

CA098    Mercantile-Warehouse Facilities    2700 Mercantile Drive Suite 350
Rancho Cordova CA 95670    Campus    Tier 3    CA110    Woodland Hills-Logistics
   21250 Califa St. Suite 112 Woodland Hills CA 91367    Campus    Tier 3   
CA134    International Drive    10834 International Drive Suite 200 Rancho
Cordova CA 95670    Campus    Tier 2    CA136    Woodland Hills-Executive
Offices    21650 Oxnard Street Woodland Hills CA 91367    Campus    Tier 1   
CA331    San Rafael – Kerner   

2370 Kerner Blvd.

San Rafael CA 94901

   Campus    Tier 1    CA258    Gold Point - Building C    11971 Foundation
Place Bldg C Rancho Cordova CA 95670    Campus    Tier 2    CA259    Gold Pointe
- Building D    11931 Foundation Place Bldg D Rancho Cordova CA 95670    Campus
   Tier 2   

 

Schedule F    F - 3    Health Net/IBM Confidential

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Final Execution Version

 

Site ID

  

General Facility Name

  

Facility Address

  

Facility Classification
(Campus Metro,
Remote)

  

Network Tier
Classifications

  

Supplier Space
Requirements

CA260    LNR - Bldg B   

21281 Burbank Blvd.

Building B — Floors 1-5

Woodland Hills CA 91367

   Campus    Tier 1    From Effective Date:, 5 cubes, 3 high walled cubes
w/lockable cabinets (Supplier would anticipate that these requirements may be
reduced if re-badged associates retain offices occupied prior to the Effective
Date) CA261    LNR - Bldg C   

21271 Burbank Blvd.

Building C — Floors 2-5

Woodland Hills CA 91367

   Campus    Tier 1    CA297    White Rock   

10540 White Rock Road

Rancho Cordova CA 95670

   Campus    Tier 2    CA306    Sun Center   

11031 Sun Center Drive

Rancho Cordova CA 95670

   Campus    Tier 1    CT003    Shelton-FMC   

1 Far Mill Crossing

Shelton CT 06484

   Campus    Tier 1    CT006    Shelton-KCB   

100 Beard Saw Mill Road

2nd - 6th Floors Shelton CT 06484

   Campus    Tier 1    CT017    Shelton - Research Drive   

4 Research Drive 5th floor

Shelton CT 06484

   Campus    Tier 1    From Effective Date:1 cube VA015    Washington DC
Regional Call Center   

2107 Wilson Blvd Suite 900

Arlington VA 22201

  

Campus Mon. to Fri. 8am-5pm local time.

Remote all non-Campus hours for Contract Year 1

   Tier 1    From Effective Date: 1 cube

 

Schedule F    F - 4    Health Net/IBM Confidential

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Final Execution Version

 

Site ID

  

General Facility Name

  

Facility Address

  

Facility Classification
(Campus Metro,
Remote)

  

Network Tier
Classifications

  

Supplier Space
Requirements

         Remote following Contract Year 1 to the end of the Term *       PA017
   Johnstown   

1 Pasquerilla Plaza

Johnstown PA 15901

  

Campus Mon.-Fri. 8am to 5pm local time Remote all non-Campus hours for Contract
Year 1

Remote following Contract Year 1 to the end of the Term *

   Tier 1    From Effective Date: 1 cube VA016    Hampton Call Center   

514 Butler Farm Rd

Hampton VA 23666

  

Campus Mon.-Fri. 8am to 5pm local time Remote all non-Campus hours for Contract
Year 1,

Remote following Contract Year 1 *

   Tier 1    From Effective Date: 1 cube NJ016    Old Bridge Facility   

90 Matawan Rd

Matawan (Old Bridge) NJ 07747

  

Campus Mon.-Fri. 8am to 5pm local time.

Remote all non-Campus hours. Remote following Contract Year 1 to

   Tier 1    From Effective Date:1 cube

 

Schedule F    F - 5    Health Net/IBM Confidential

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Site ID

  

General Facility Name

  

Facility Address

  

Facility Classification
(Campus Metro,
Remote)

  

Network Tier
Classifications

  

Supplier Space
Requirements

         the end of the Term. *       TX015    Irving   

5525 N. MacArthur Blvd.

Suite 800

Irving TX 75038

  

Campus Mon.-Fri. 8am to 5pm local time.

Remote all non-Campus hours for Contract Year 1. Remote following Contract Year
1 to the end of the Term *

   Tier 1    From Effective Date:1 cube OR008    Tigard   

13221 SW 68th Parkway

Tigard OR 97223-8328

  

Campus Mon.-Fri. 8am-5pm local time.

Remote all non-Campus hours for Contract Year 1. Remote following Contract Year
1 to the end of the Term. *

   Tier 1    From Effective Date:1 cube CA045    Huntington Beach    7755 Center
Ave Suite 700 Huntington Beach CA 92647    Metro    Tier 2    CA059    Pasadena
  

1055 E. Colorado Blvd

Suite 300

Pasadena CA 91105

   Metro    Tier 2   

 

Schedule F    F - 6    Health Net/IBM Confidential

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Final Execution Version

 

Site ID

  

General Facility Name

  

Facility Address

  

Facility Classification
(Campus Metro,
Remote)

  

Network Tier
Classifications

  

Supplier Space
Requirements

CA118    San Diego   

3131 Camino Del Rio N.

Suite 1100

San Diego CA 92108-5783

   Metro    Tier 2    CA128    Oakland DDP    344 Pendleton Way Oakland CA 94621
   Metro    Tier 2    CA256    Point Richmond    503 Canal Blvd Building # 3
Richmond CA 94804    Metro    Tier 3    CA305    Chatsworth (Print)    20559
Prairie St Chatsworth, CA 91311    Metro    Tier 3    CA326    Oakland    180
Grand Avenue Oakland CA 94612-375    Metro    Tier 2    NY024    New York-East
42nd    150 East 42nd Street 26th floor New York NY 10165   

Metro Mon.-Fri. 8am to 5pm local time.

Remote all non-Metro hours. Remote following Contract Year 1 to the end of the
Term. *

   Tier 2    From Effective Date:1 cube AZ006    Tucson    950 North Finance
Center Drive Tucson AZ 85710   

Metro Mon. to Fri. 8am-5pm local time.

Remote all non-Metro hours for Contract Year 1. Remote following Contract Year 1
to the end of the

   Tier 2    From Effective Date:1 cube

 

Schedule F    F - 7    Health Net/IBM Confidential

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Final Execution Version

 

Site ID

  

General Facility Name

  

Facility Address

  

Facility Classification
(Campus Metro,
Remote)

  

Network Tier
Classifications

  

Supplier Space
Requirements

         Term. *       AZ014    Tempe   

1230 W. Washington St.

Suite 400

Tempe AZ 85281

  

Metro Mon. to Fri. 8am-5pm local time.

Remote all non-Metro hours for Contract Year 1. Remote following Contract Year 1
to the end of the Term. *

   Tier 2    From Effective Date:1 cube DC001    Washington DC-Pentagon Clinic
  

AHN1 @ Pentagon

Arlington VA 22202

  

Metro Mon. to Fri. 8am-5pm local time.

Remote all non-Metro hours for Contract Year 1

Remote following Contract Year 1 to the end of the Term *

   Tier 3    NY003    New York MHN   

40 Wall St. 6th floor

New York NY 10005

  

Metro Mon.-Fri. 8am to 5pm local time.

Remote all non-Metro hours for Contract Year 1. Remote following

   Tier 2   

 

Schedule F    F - 8    Health Net/IBM Confidential

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Site ID

  

General Facility Name

  

Facility Address

  

Facility Classification
(Campus Metro,
Remote)

  

Network Tier
Classifications

  

Supplier Space
Requirements

         Contract Year 1 to the end of the Term *       AZ009    Catalina-Mesa
CBH   

1220 S. Alma School Rd

Suite 109 Mesa, AZ 85210

   Remote    Tier 3    CA079    San Marcos DDP   

1637 Capalina Road

San Marcos CA 92069

   Remote    Tier 2    CA107    Stockton Sales    3133 W March Lane Suite 1000
Stockton CA 95219    Remote    Tier 3    CA109    Ventura    290 Maple Court
Suite 190 Ventura CA 93003    Remote    Tier 2    CA127    San Mateo DDP    1941
O’Farrell Street Suite 114 San Mateo CA 94403    Remote    Tier 3    CA131   
San Jose   

1737 N. First St. Suite 230

San Jose CA 95112-4505

   Remote    Tier 3    CA133    Mountain View DDP   

625 Ellis Street Ste. 100

Mountain View CA 94043

   Remote    Tier 3    CA137    Modesto DDP   

2260 Floyd Ave Suite 100

Modesto CA 95355

   Remote    Tier 3    CA138    Visalia   

916 W. Oak SW#A

Visalia CA 93291

   Remote    Tier 3    CA142    San Bernadino    650 E. Hospitality Lane 2nd
Floor San Bernardino CA 92408    Remote    Tier 2    CA267    Union City &
Dublin   

2847-B Whipple Road

Union City CA 94587

   Remote    Tier 3   

 

Schedule F    F - 9    Health Net/IBM Confidential

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Final Execution Version

 

Site ID

  

General Facility Name

  

Facility Address

  

Facility Classification
(Campus Metro,
Remote)

  

Network Tier
Classifications

  

Supplier Space
Requirements

CA269    Concord    1070 Concord Ave Suite 222 Concord CA 94520    Remote   
Tier 3    CA284    Dublin OHS    11875 Dublin Ave Suite# D176 Dublin CA   
Remote    Tier 3    CA286    Fresno    7485 North Palm Ave Suite 101 Fresno CA
93711    Remote    Tier 2    CA289    Bakersfield    3100 19th St Suite 200
Bakersfield CA 93301    Remote    Tier 3    CA293    El Cerrito DUI    11299 San
Pablo Ave. Suite W El Cerrito CA 94530    Remote    Tier 3    CA298    Signal
Hill   

1600 E. Hill Street

Signal Hill CA 90806

   Remote    Tier 2    CA301    East Los Angeles   

5055 Whittier Boulevard East

Los Angeles CA 90022

   Remote    Tier 3    CA302    Modesto   

1940 Crows Landing Road

Suite 10 Modesto CA 95358

   Remote    Tier 3    CA304    Turlock    2406 W Monte Vista Ave Turlock, CA
95382    Remote    Tier 3    CT008    Electric Boat   

75 Eastern Point Road

Groton CT 06340

   Remote    Tier 3    CT012    New London USCG Clinic   

15 Mohegan Ave

New London CT 06320

   Remote    Tier 3    CT013    Groton NACC   

220 Route 12 Suite 6

Groton CT 06340

   Remote    Tier 3   

 

Schedule F    F - 10    Health Net/IBM Confidential

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Site ID

  

General Facility Name

  

Facility Address

  

Facility Classification
(Campus Metro,
Remote)

  

Network Tier
Classifications

  

Supplier Space
Requirements

DC002    Bolling AFB Clinic - MDG   

238 Brookley Ave SW

Bolling AFB DC 20032

   Metro    Tier 3    DC003    DC USCG Clinic   

2100 2nd St SW Washington,

DC 20593

   Metro    Tier 3    DC004    Walter Reed AMC    6900 Georgia Ave. NW Building
2 Suite 3D Washington DC 20307    Metro    Tier 3    DE001    Dover AFB Clinic
  

436 Medical Group 300

Tuskegee Blvd Rm.

1C8C Dover DE 19902

   Remote    Tier 3    IL001    Scott AFB MC   

310 W. Losey Street Bldg

1530 Rm 1206 Scott AFB IL 62225

   Remote    Tier 3    IL009    Chanute AFB Clinic   

601 South Century Blvd

Suite 1116 Rantoul IL 61866

   Remote    Tier 3    IL010    Great Lakes Naval Hospital    3001A 6th Street
Building 200H 5th Floor Great Lakes IL 60088    Remote    Tier 3    IN002   
Fort Ben Harrison   

5807 North Post Rd.

Indianapolis IN 46216

   Remote    Tier 3    IN003    Grissom AFB   

1200 KittyHawk Suite 102

Peru IN 46970

   Remote    Tier 3    KY002    Fort Knox AH   

851 Ireland Loop Basement

Floor NBF-32 Fort Knox KY 40121

   Remote    Tier 3    KY003    Lexington Army Depot    VA Medical Center 2250
Leestown Rd. Lexington KY    Remote    Tier 3   

 

Schedule F    F - 11    Health Net/IBM Confidential

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Final Execution Version

 

Site ID

  

General Facility Name

  

Facility Address

   Facility
Classification
(Campus Metro,
Remote)    Network Tier
Classifications    Supplier
Space
Requirements       40511          KY004    Fort Campbell ACH    2525 22nd Street
Fort Campbell KY 42223    Remote    Tier 3    MA005    Hanscom AFB Clinic   
1646 Grenier St. Bldg 1646 Bed MA 01731    Remote    Tier 3    MA006    Boston
USCG Clinic    427 Commercial St Bldg 8 Boston, MA 02109    Remote    Tier 3   
MA007    Cape Cod USCG Clinic/Buzzards Bay    5201 Lee Road Bourne MA 02559   
Remote    Tier 3    MA015    Westover AFB MA    390 Walker Ave Rm 114 Westover
AFB, MA 022022-1534    Remote    Tier 3    MD002    Malcolm Grow MC   

AHN 1 ANDREWS AFB 1050 West Perimeter Rd

Andrews AFB MD 20762

   Remote    Tier 3    MD003    Kimbrough AHC   

4407 Llewellyn Ave.

Fort Meade MD 20755

   Remote    Tier 3    MD004    Barquist AHC    810 Schreider St Fort Detrick MD
21702    Remote    Tier 3    MD005    Bethesda NMC   

8901 Wisconsin Ave

Bethesda MD 20814

   Remote    Tier 2    MD006    Annapolis NMC   

250 Wood Rd Annapolis

MD 21401

   Remote    Tier 3    MD007    Baltimore USCG Clinic    2401 Hawkins Point Rd.
Baltimore MD 21226    Remote    Tier 3   

 

Schedule F    F - 12    Health Net/IBM Confidential

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Final Execution Version

 

Site ID

  

General Facility Name

  

Facility Address

   Facility
Classification
(Campus Metro,
Remote)    Network Tier
Classifications    Supplier
Space
Requirements MD008    Kirk AHC    2501 Oakington St. Aberdeen Proving Grounds MD
21005    Remote    Tier 3    MD009    Patuxtent River NMC    22268 Cedar Point
Rd Patuxtent River MD 20670    Remote    Tier 3    ME001    Loring AFB
(Limestone)   

25 Sweden St Caribou,

ME 04736

   Remote    Tier 3    ME002    BMC NAS Brunswick    650 Sewall Room 448
Brunswick ME 04011    Remote    Tier 3    MI003    Wurtsmith AFB    5671 Skeel
Ave Suite 16 Oscoda MI 48750    Remote    Tier 3    MI004    Traverse City USCG
Clinic    1175 Airport Access Rd Traverse City MI 49686    Remote    Tier 3   
MI005    NAF Detroit   

183 Arnold Circle Building 944 Bldg 944 Selfridge

MI 48045

   Remote    Tier 3    MI006    Sawyer AFB   

301 Explorer Street

Gwinn MI 49841

   Remote    Tier 3    NC003    Pope AFB Clinic   

384 Maynard St. SGSI - Building 308 Pope

AFB NC 28308

   Remote    Tier 3    NC004    Seymour Johnson AF Clinic   

1057 Jabrac Ave. Bldg 2815 Seymour Johnson

AFB NC 27531

   Remote    Tier 3    NC005    Camp Lejeune NH #1   

100 Brewster Blvd Building NH-100 Camp

Lejeune NC 28547

   Remote    Tier 3    NC006    Cherry Point Naval Hospital    1 Cherry Point
TriCare Bldg.    Remote    Tier 3   

 

Schedule F    F - 13    Health Net/IBM Confidential

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Final Execution Version

 

Site ID

  

General Facility Name

  

Facility Address

   Facility
Classification
(Campus Metro,
Remote)    Network Tier
Classifications    Supplier
Space
Requirements       4389 Rm 1410          NC010    Womack AMC    4-2817 Reilly
Rd. Fort Bragg NC 28310    Remote    Tier 3    NC011    Winston-Salem    110
Oakwood Winston Salem NC 27101    Remote    Tier 3    NC012    Elizabeth City
USCG Clinic    1664 Weeksville Rd Elizabeth City, NC 27909    Remote    Tier 3
   NH001    Pease/Portsmouth NBMC    1 New Hampshire Ave Ste 105 Portsmouth, NH
03801    Remote    Tier 3    NJ013    Walson / McGuire Clinic   

1901 E. 3rd St McGuire

AFB NJ 08641

   Remote    Tier 3    NJ014    Patterson AHC   

1075 Stephenson Ave. 1st Floor Building 1075 Fort Monmouth

NJ 07703

   Remote    Tier 3    NJ015    Cape May USCG Clinic   

1 Munro Ave Cape May,

NJ 08204

   Remote    Tier 3    NY013    Fort Drum ACH- Guthrie #1   

11050 Mt. Belvedere Blvd

Rm 441 (Tricare Location)

Fort Drum NY 13602

   Remote    Tier 3    NY014    Hamilton Ainesworth AHC    114 White Avenue Ft.
Hamilton Brooklyn NY 11252    Remote    Tier 3    NY015    New York USCG Clinic
  

212 Coast guard Dr Staten Island,

NY 10305

   Remote    Tier 3    NY016    Keller ACH West Point    273 Main Highland Falls
NY 10928    Remote    Tier 3    NY017    TSC Griffis AFB    125 Brookley Rd.
Building    Remote    Tier 3   

 

Schedule F    F - 14    Health Net/IBM Confidential

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Final Execution Version

 

Site ID

  

General Facility Name

  

Facility Address

   Facility
Classification
(Campus Metro,
Remote)    Network Tier
Classifications    Supplier
Space
Requirements       510 Rome NY 13441          NY018    TSC Plattsburgh AFB    43
Durkee Suite 400 Plattsburgh NY 12901    Remote    Tier 3    NY019    Watertown
- Guthrie #2    428 Washington St. Suite #3 Watertown NY 13601    Remote    Tier
3    OH003    Akron (Canton Cleveland)    2383 S. Main St. Suite D103
Akron OH 44319    Remote    Tier 3    OH004    Columbus/San Antonio DSCC    3990
East Broad St DSCC Building 52 1st Floor Columbus OH 43213    Remote    Tier 3
   OH005    Wright Patterson AFB MC   

4881 Sugar Maple Dr. 74th Medical Group Wright Patterson AFB

Dayton OH 45433

   Remote    Tier 3    OH006    Wright Peterson Sub Regional Office    4027
Colonel Glenn Hwy 4th Floor Beaver Creek, OH 45431    Remote    Tier 3    OH007
   Wright Paterson Sub-Regional Office   

4225 LOGISTICS AVE WRIGHT PATTERSON

AFB OH 45433

   Remote    Tier 3    PA014    Carlisle (Dunham AHC)   

450 Gibner Rd Rm 405

Carlisle PA 17013

   Remote    Tier 3    PA015    Pittsburg    333 Rouser Road Moon / Coraopolis
PA 15108    Remote    Tier 3    RI001    Newport NACC    43 Smith Rd Newport RI
02841    Remote    Tier 3    RI002    Newport Sub-Regional    1300 Division Rd.
Suite 301    Remote    Tier 3   

 

Schedule F    F - 15    Health Net/IBM Confidential

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Final Execution Version

 

Site ID

  

General Facility Name

  

Facility Address

   Facility
Classification
(Campus Metro,
Remote)    Network Tier
Classifications    Supplier
Space
Requirements       West Warwick RI 02893          SC003    Surfside Beach Call
Center   

8733 Highway 17 Bypass

Bldg 100 Surfside Beach

SC 29575

   Remote    Tier 3    VA003    Kenner AHC    700 24th Street Building P8130
Suite 103 Ft. Lee VA 23801    Remote    Tier 3    VA004    McDonald ACH #1   
576 Jefferson Ave Fort Eustis VA 23604    Remote    Tier 3    VA005    Langley
AFB Clinic    45 Pine Rd Bldg. 266 Tricare 1st Mdg Grp/SGST Langley VA 23665   
Remote    Tier 3    VA006    Portsmouth NMC #1   

50 Lewis Minor St.

Building 249 Portsmouth VA 23708

   Remote    Tier 3    VA008    Yorktown USCG Clinic   

State Route 238 Bldg

246 Yorktown VA 23690

   Remote    Tier 3    VA009    Family Heath Center    2740 Prosperity Ave Ste
100, Fairfax, VA 22031    Remote    Tier 3    VA010    DeWitt ACH    9501
Farrell Rd. Building 808 Fort Belvoir VA 22060    Remote    Tier 3    VA011   
Quantico NMC   

3259 Catlin Ave.

Quantico VA 22134

   Remote    Tier 3    VA012    Andrew Radar AHC    411 Carpenter Rd Bldg 525 Rm
125 Fort Myer, WA 22211    Remote    Tier 3    VA013    Wooodbridge Family
Health Center    14450 Smoke town Rd. Woodbridge VA 22193    Remote    Tier 3   

 

Schedule F    F - 16    Health Net/IBM Confidential

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Final Execution Version

 

Site ID

  

General Facility Name

  

Facility Address

   Facility
Classification
(Campus Metro,
Remote)    Network Tier
Classifications    Supplier
Space
Requirements VA014    Virgina Beach Sub-Regional   

222 Central Park Ave.

Suite 1840 Virgina Beach

VA 23462

   Remote    Tier 3    WA009    Tacoma Regional Head Office    3600 Port of
Tacoma Road Suite 400 Tacoma WA 98424    Remote    Tier 2    WI003    Wauwatosa
HMC    2600 N. Mayfair Rd. Suite 490 Wauwatosa WI 53226    Remote    Tier 3   

 

* For those Facilities marked with an asterisk (*) in the Facilities
Classification column, Health Net may, at its option, extend the higher
classification noted therein beyond Contract Year 1 at the Charges set forth in
Exhibit C-5 (Time and Materials Rate Card) identified as Remote Deskside
Support.

 

3. SUPPLIER FACILITIES

 

IBM ENTITY

  

IBM LOCATION(S)

IBM Delivery Centers    United States IBM Data Center   

IBM Boulder

6300 Diagonal Highway

Boulder, CO 800301

IBM Data Center   

IBM Columbus, OH

4499 Fisher Road, Columbus, OH 43228

 

Schedule F    F - 17    Health Net/IBM Confidential

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IBM ENTITY

  

IBM LOCATION(S)

IBM Delivery Centers    United States IBM Data Center   

IBM Dallas, TX

1000 Belleview St., Dallas, TX 75215

IBM Data Center   

IBM Lexington, KY

745 W New Circle Road, Lexington, KY 40511

IBM Data Center   

IBM Poughkeepsie, NY

2455 South Road, Poughkeepsie, NY 12601-5400

IBM Data Center   

IBM Raleigh, NC

3039 E CORNWALLIS RD, RESEARCH TRIANGLE PARK NC 27709-2195

IBM Data Center   

IBM Rochester, NY

1630 Long Pond Rd, Rochester, NY 14626

IBM Data Center   

IBM Southbury, CT

150 Kettletown Rd, Southbury, CT 06488

IBM Data Center   

IBM Saint Louis, MO

325 McDonnell Blvd, Hazelwood, MO 63042

IBM Delivery Centers    India IBM Data Center    IBM Global Services India Pvt.
Limited, 7th Floor, Sterling Towers, 327, Anna Salai, Teynampet, Chennai –
600006 IBM Data Center    IBM Global Services Pvt Ltd, Embassy Golf Links
Business Park, Off Koramangala-Indiranagar Ring Road, Bangalore 560071 India

 

Schedule F    F - 18    Health Net/IBM Confidential

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Final Execution Version

 

IBM ENTITY

  

IBM LOCATION(S)

IBM Delivery Centers    United States IBM Data Center    IBM Global Services
India Pvt. Limited, Outer Ring Road, Embassy Manyatha B, Rachenahalli & Nagawara
Villages, Bangalore KA 560045, India IBM Data Center    Mindspace Cyberabad,
Building No 3, Survey No 64, APIIC Software layout, Hitech City, Madhapur,
Hyderabad - 500081 IBM Delivery Centers    Argentina IBM Data Center    Urquiza
405, Vicente Lopez, Provincia de Buenos Aires, Argentina (CP1638) IBM Delivery
Centers    Canada IBM Delivery Centers   

IBM Calgary

630 3rd Ave SW E. Calgary, AB, Canada

IBM Delivery Centers   

IBM Markham

3500 Steeles Ave East, Markham, ON L3R 9Z7,

Canada

IBM Delivery Centers   

IBM Markham

100 Gough Road, Markham, ON,

Canada

IBM Delivery Centers   

IBM Montreal

275 Viger E, Montreal, QC, Canada

IBM Delivery Centers   

IBM Toronto

245 Consumers Road, North York, ON M2J, Canada

 

Schedule F    F - 19    Health Net/IBM Confidential

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Final Execution Version

 

4. APPROVED SUBCONTRACTOR FACILITIES

 

SUBCONTRACTOR ENTITY

  

FACILITY ADDRESS

AT&T Delivery Centers   

AT&T Global Network Management Center (GNMC),

630 3rd Avenue, SW, Calgary, Alberta, Canada

   Delivery at IBM United States facilities (see IBM facility list above) AT&T
Delivery Centers   

4625 Creekstone Drive

Durham, NC 27703

AT&T Delivery Centers   

Jornalista Francisco Aguirre Proença Road

SP-101, KM09

Hortolandia, Brazil 13186900

AT&T Delivery Centers   

Block D, Embassy Golf Links, Off Indiranagar Koramangala Ring Road

Bangalore 560071 India

 

Schedule F    F - 20    Health Net/IBM Confidential

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Final Execution Version

 

SCHEDULE G

GOVERNANCE

 

Schedule G    G - 1    Health Net / IBM Confidential

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Final Execution Version

 

SCHEDULE G

GOVERNANCE

 

1. INTRODUCTION

This Schedule G (Governance) sets forth an integrated set of business office
processes, plans and tools (“Contract Governance”). The purpose of this Contract
Governance is to monitor and control all aspects of the Services in order to
promote smooth operation of the Services in accordance with the Agreement. This
Schedule G describes the Contract Governance plan, Health Net’s and Supplier’s
roles and responsibilities, the relationship management structure, and the
decision making processes related to the Services. Conflicts between this
Schedule G and the General Terms and Conditions or other Schedules or Exhibits
will be governed by the General Terms and Conditions or other Schedules or
Exhibits.

 

2. CONTRACT GOVERNANCE PLAN

2.1 Health Net and Supplier will jointly develop, approve and implement the
Contract Governance plan within one hundred twenty (120) days following the
Effective Date. Such plan will:

 

  (a) Specify the formal organizations, processes, and practices for managing
Health Net’s and Supplier’s relationship under the Agreement;

 

  (b) Establish organizational interfaces for management and operation of the
Agreement including:

(i) the governance organization charts for Health Net and Supplier for inclusion
in the Procedures Manual;

(ii) framework for reports and meetings calendars; and

(iii) operational authority and delegation.

 

  (c) Provide a high level overview of the business office governance processes
requiring Health Net’s involvement and identify the process interfaces;

 

  (d) Establish a strategy for communicating and planning for major organization
changes (i.e., people, processes, functions); and

 

  (e) Enhance and facilitate effective operating protocols and resolution of
certain disputes in accordance with Section 26 of the General Terms and
Conditions.

2.2 The Contract Governance plan initially consists of the following components
to be supplemented and refined pursuant to Section 2.1 above:

 

  (a) A roles and authorities matrix to identify Health Net and Supplier
individual roles and authorization levels required to operate Contract
Governance for inclusion in the Procedures Manual;

 

Schedule G    G - 2    Health Net / IBM Confidential

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Final Execution Version

 

  (b) A meetings plan reflecting the schedule, and attendees, and subject matter
for meetings between Health Net and Supplier and supports the management of such
meetings, which meeting plan shall include:

(i) a weekly operations meeting to discuss daily performance, issues and planned
or anticipated activities and Changes;

(ii) a monthly contract performance review of the monthly reports, charges,
contract performance, Changes, Deliverables, Projects and other matters as
appropriate;

(iii) a quarterly Joint Management Committee meeting to review appropriate
contractual, business, planning, or performance issues;

(iv) a daily operations meeting to discuss Priority 1 and other escalated
issues;

(v) a semi-annual Joint Steering Committee meeting to discuss the evolving
business agenda, review contract strategy and goals and assess performance
against such goals;

(vi) others as set out in the Agreement or mutually agreed by the Parties; and.

(vii) unless otherwise agreed by the Parties, Supplier will publish an agenda
for each meeting.

2.3 Business Office Governance Processes

Unless otherwise set forth in the Agreement, the following is an initial
proposed series of business office governance processes for managing the
Services. Supplier and Health Net shall meet and agree upon actual process
within thirty (30) days after the Effective Date. These processes, set forth
below and further defined in the Contract Governance plan, in addition to any
additional processes included in the Contract Governance plan, apply to all the
Services and will be implemented, as described in the Agreement:

 

  (a) Change Control Process governance process to receive, log, assess and
track proposed and agreed upon contract Changes;

 

  (b) Deliverables governance process to identify Deliverables and track such
Deliverables to completion;

 

  (c) Customer satisfaction governance plan to assess Health Net’s priorities,
set realistic expectations, measure Health Net’s satisfaction with the Services
and to use such feedback to improve Health Net’s satisfaction with the Services;

 

  (d) Formal correspondence governance process to establish and implement an
agreed upon protocol for Health Net and Supplier formal communications;

 

  (e) Program issues governance process to receive, qualify and manage issues
that require the intervention of the Health Net and/or Supplier Project
Executive or their respective management teams to facilitate resolution;

 

Schedule G    G - 3    Health Net / IBM Confidential

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Final Execution Version

 

  (f) Request governance process for the submission, qualification and analysis
of service requests (excluding the day-to-day operational service requests),
development and delivery of proposals, as needed, for such services and logging
and tracking to closure; and

 

  (g) Service Level governance process to review, monitor and manage issues
related to the Service Levels.

2.4 Responsibilities

 

  (a) Supplier will:

(i) assign an individual to be the single point of contact to Health Net for the
Contract Governance plan development and maintenance;

(ii) identify the Supplier attendees for the meetings reflected in the meetings
plan and any updates as they occur;

(iii) draft the initial Contract Governance plan and provide to Health Net
within ninety (90) days after the Effective Date;

(iv) review Health Net feedback and revise the draft Contract Governance plan
and submit to Health Net for Health Net review and approval;

(v) identify process inhibitors, and propose process improvements to Health Net,
as required;

(vi) jointly review the Contract Governance plan on an annual basis or more
frequently as may be agreed by the Parties, and update / maintain the Contract
Governance plan accordingly; and

(vii) provide appropriate Supplier employees access to the Contract Governance
plan, as needed.

 

  (b) Health Net will:

(i) assign an individual to be the single point of contact to Supplier for the
Contract Governance plan development and maintenance;

(ii) provide, update and maintain the Health Net organization charts;

(iii) provide a list of Health Net attendees for the meetings reflected in the
meetings plan and any updates as they occur;

(iv) review and provide to Supplier, in writing, Health Net’s comments,
questions and proposed changes to the draft plan within thirty (30) days
following Health Net’s acknowledged receipt of the draft Contract Governance
plan;

 

Schedule G    G - 4    Health Net / IBM Confidential

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Final Execution Version

 

(v) acknowledge Health Net’s receipt and approval of the final version of the
Contract Governance plan;

(vi) identify process inhibitors and propose process improvements to Supplier,
as appropriate;

(vii) jointly review / update the Contract Governance plan on an annual basis or
more frequently as may be agreed by the Parties; and

(viii) provide the Contract Governance plan to appropriate Health Net employees,
as appropriate.

2.5 Relationship Management Structure

Within thirty (30) days after the Effective Date, Health Net and Supplier will
identify the titles of the initial members of the committees set forth below and
will agree upon a process for replacement of the committee members during the
Term.

 

  (a) Joint Steering Committee

(i) Health Net and Supplier will jointly create a committee consisting of three
management employees from Health Net and its Affiliates and three management
employees from Supplier and its Affiliates who will focus on Health Net’s and
Supplier’s long-term strategic plans as they relate to the Services (“Joint
Steering Committee”).

(ii) The Joint Steering Committee will:

 

  (A) meet at least semi-annually to discuss the evolving business agenda of
Health Net and Supplier as it relates to the Services;

 

  (B) facilitate the goals of the Agreement;

 

  (C) review performance against goals and revise such goals, as appropriate;

 

  (D) approve and/or propose Changes to the Agreement, as appropriate;

 

  (E) identify major Health Net organization changes (i.e., people, processes,
functions) or proposed changes affecting the Agreement;

 

  (F) review industry / business trends and the impact of technology on the
Services;

 

  (G) evaluate Supplier industry initiatives for potential applicability to the
Services;

 

Schedule G    G - 5    Health Net / IBM Confidential

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Final Execution Version

 

  (H) review operating and strategic plans prepared by the Project Executives;

 

  (I) upon Health Net’s or Supplier’s request, assist in resolving issues
arising under this Agreement; and

 

  (J) participate in the dispute resolution process set forth in Section 26 of
the General Terms and Conditions, as necessary.

 

  (b) Joint Management Committee

(i) Health Net and Supplier will jointly create a committee consisting of three
management employees from Health Net and its Affiliates and three management
employees from Supplier and its Affiliates who will focus on management of the
Health Net and Supplier relationship and delivery of the Services (“Joint
Management Committee”).

(ii) The Joint Management Committee will:

 

  (A) meet at least quarterly to promote effective relationship management and
to validate progress under this Agreement;

 

  (B) develop and implement plans to meet the goals of this Agreement;

 

  (C) review performance against the established Service Levels and address
contractual or management problems and issues, as appropriate;

 

  (D) assess the quality of Health Net’s and Supplier’s working relationship and
develop / implement action plans to strengthen such relationship, as
appropriate;

 

  (E) identify and address issues affecting performance of the Services;

 

  (F) identify and manage impending change; and

 

  (G) when appropriate, propose changes to the Joint Steering Committee
regarding the Health Net and Supplier relationship, and/or the Agreement.

 

  (c) Joint Operations Committee

(i) Within thirty (30) days after the Effective Date, Health Net and Supplier
will jointly create one or more committees comprised of employees of Health Net
and its Affiliates and employees of Supplier and its Affiliates (“Joint
Operations Committee”) who will focus on the day-to-day operations and delivery
of the Services.

(ii) Each Joint Operations Committee shall:

 

Schedule G    G - 6    Health Net / IBM Confidential

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Final Execution Version

 

  (A) meet at least monthly to review operational performance status and plans;

 

  (B) conduct contract performance review meetings;

 

  (C) review operational trends and analysis and take corrective action, as
required;

 

  (D) identify and address potential operational issues;

 

  (E) identify and manage operational change; and

 

  (F) make recommendations, as appropriate, to the Joint Management Committee.

2.6 Dispute Resolution

If Health Net and Supplier have a dispute regarding the Services, Health Net and
Supplier will follow the dispute resolution process described in Section 26 of
the General Terms and Conditions of the Agreement.

 

Schedule G    G - 7    Health Net / IBM Confidential

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Final Execution Version

 

SCHEDULE H

SUPPLIER INSURANCE

 

Schedule H    H - 1    Health Net / IBM Confidential

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Final Execution Version

 

SCHEDULE H

SUPPLIER INSURANCE

 

1. INTRODUCTION

In accordance with Section 22 (Insurance) of the General Terms and Conditions of
the Agreement, this Schedule H sets forth the requirements for insurance to be
maintained by Supplier and its Approved Subcontractors, set forth in Schedule P
(Approved Subcontractors).

 

2. TYPES AND AMOUNTS OF COVERAGE

Supplier represents that as of the Effective Date it will have, and agrees that
during the Term it will maintain in force, at least the following types and
amounts of insurance:

 

  (a) Employer’s Liability Insurance and Worker’s Compensation Insurance,
including coverage for occupational injury, illness and disease insurance in
accordance with the laws of the country, state or territory exercising
jurisdiction over the employee with minimum limits per employee and per event of
$1,000,000 or the minimum limit required by law, whichever limit is greater.

 

  (b) Comprehensive General Liability Insurance, including Products, Completed
Operations, Premises Operations, Bodily Injury, Personal and Advertising Injury,
Broad Form Contractual and Broad Form Property Damage liability coverages, on an
occurrence basis, with a minimum combined single limit per occurrence of
$7,000,000 and a minimum combined single aggregate limit of $7,000,000. This
coverage will name Health Net and its Affiliates as additional insureds.

 

  (c) Property Insurance coverage, for all risks of physical loss of or damage
to Health Net business property (i.e., Health Net Equipment and related tangible
personal property) that is in the possession, care, custody or control of
Supplier pursuant to the Agreement. Such insurance will have a minimum limit
adequate to cover risks on a replacement costs basis, and name Health Net and
its Affiliates as joint loss payees.

 

  (d) Automotive Liability Insurance covering use of all owned, non-owned and
hired automobiles for bodily injury, property damage liability with a minimum
combined single limit per accident of $1,000,000 or the minimum limit required
by law, whichever limit is greater. This coverage will name Health Net and its
Affiliates as additional insureds.

 

  (e) Commercial Crime Insurance, including blanket coverage for Employee
Dishonesty and Computer Fraud (as it relates to the theft of tangible property
only), for loss or damage arising out of or in connection with any fraudulent or
dishonest acts committed by the employees of Supplier, acting alone or in
collusion with others, with a minimum limit of $10,000,000 per occurrence. This
coverage will name Health Net and its Affiliates as joint loss payees.

 

  (f) Errors and Omissions Liability Insurance covering liability for loss or
damage due to an act, error, omission or negligence, with a minimum limit of
$1,000,000 per claim and a minimum combined single aggregate limit of
$3,000,000.

 

3. TERMS OF COVERAGE

 

  (a)

The insurance coverages described in Section 2(b) and Section 2(d) above will be
primary and non-contributory but only with respect to liability arising out of
IBM’s

 

Schedule H    H - 2    Health Net / IBM Confidential

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Final Execution Version

 

 

negligence and as respects to this contract only. Supplier will be responsible
for all deductibles and retentions with regard to such insurance.

 

  (b) Supplier will cause its insurers to issue certificates of insurance
evidencing that the coverages and policy endorsements required under this
Agreement are maintained in force and that should any of the policies described
herein be canceled before the expiration date thereof, the insurer affording
coverage will endeavor to mail thirty (30) days written notice to the
certificate holder named herein, but failure to mail such notice shall impose no
obligation of liability of any kind upon the insurer affording coverage, its
agents or representatives. The insurers (other than captives as related to
Supplier’s property coverage set out in Section 2(c) only) selected by Supplier
will have an A.M. Best rating of A-, Size VII or better, or, if such ratings are
no longer available, with a comparable rating from a recognized insurance rating
agency. Supplier will ensure that Approved Subcontractors maintain insurance
coverages as described in this Schedule H (for the sake of clarity Approved
Subcontractors are not covered under any Supplier insurance coverages).

 

  (c) In the case of loss or damage or other event that requires notice or other
action under the terms of any Supplier’s insurance coverage described above as
it relates to Health Net property under Supplier’s or the Services, Supplier
will be solely responsible for taking such action. To the extent Health Net
knows of an event that requires notice or other action by Supplier as it relates
to this Agreement, Health Net will endeavor in good faith to notify Supplier.
Supplier will provide Health Net with contemporaneous notice and with such other
information as Health Net may reasonably request regarding the event.

 

  (d) The Parties do not intend to shift all risk of loss to insurance.
Supplier’s obligation to maintain insurance coverage in specified amounts will
not act as a limitation on any other liability or obligation which Supplier
would otherwise have under the Agreement. Similarly, the naming of Health Net
and its Affiliates as additional insureds is not intended to be a limitation of
Supplier’s liability under the Agreement and will in no event be deemed to, or
serve to, limit Supplier’s liability to Health Net to available insurance
coverage or to the policy limits specified in this Schedule H, nor to limit
Health Net’s rights to exercise any and all remedies available to Health Net
under the Agreement, at law or in equity. The insurance policies referred to
hereunder do not increase either Supplier’s obligations to the Health Net under
the Agreement (other than Supplier’s obligation to maintain the coverage) or the
rights or benefits afforded Health Net in the event of a breach of the
Agreement.

 

  (e) Nothing hereunder this Schedule H does not and shall not be construed to
expand either Party’s obligations as to any liability for (without limitation)
indirect or consequential, exemplary, punitive or special damages unless and as
expressly provided under Section 24.2 of the General Terms and Conditions.

 

Schedule H    H - 3    Health Net / IBM Confidential

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SCHEDULE I

THIRD PARTY SERVICE CONTRACTS

 

Schedule I    I - 1    Health Net / IBM Confidential

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Schedule I –Third Party Service Contracts general intro language

Schedule I-1 - Third Party Service Contracts to be Assigned to IBM

Schedule I-2 - Third Party Service Contracts Managed in ASC

Schedule I-3 - Third Party Service Contracts Managed as Pass Through

Schedule I-4 - Third Party Service Contracts as Pure Pass Through

Schedule I-5 - Third Party Service Contracts to be Retained by Health Net

 

Schedule I    I - 2    Health Net / IBM Confidential

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SCHEDULE J

SOFTWARE

 

Schedule J    J - 1    Health Net / IBM Confidential

--------------------------------------------------------------------------------

 

Schedule J (Software)

 

Exhibit Number

  

Description

   During Term
License
in Name of:

J-1

   Health Net Software   

J-1-1

   Assumed    IBM

J-1-2

   Managed-In ASC    Health Net

J-1-3

   Managed-As Pass Through Expenses    Health Net

J-1-4

   Retained    Health Net

J-1-5

   Pure Pass Through Expenses    Health Net

J-2

   Supplier Software   

J-2-1

   Supplier Provided Software (Commercially Available)    IBM

J-2-2

   Supplier Provided Software (Non-Commerically Available)    IBM

J-2-3

   Supplier Proprietary Delivery Tools    IBM

J-2-4

   Supplier Third Party Software used to provide the Services (Commercially
Available)    IBM

J-2-5

   Supplier Third Party Software used to provide the Services (Non-Commercially
Available)    IBM

J-3

   Health Net Proprietary Software    Health Net

 

Schedule J    J - 2    Health Net / IBM Confidential

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Final Execution Version

 

SCHEDULE K

BUSINESS ASSOCIATE ADDENDUM

 

Schedule K    K - 1    Health Net / IBM Confidential

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Final Execution Version

 

BUSINESS ASSOCIATE ADDENDUM

This Business Associate Addendum (“Addendum”) is entered into by and between
Health Net, Inc., and its affiliates (“Health Net”), and International Business
Machines Corporation (“Business Associate”).

 

A. Health Net and Business Associate are parties to or are entering into, that
certain Master Service Agreement dated August 19, 2008 (the “Current Contract”)
pursuant to which Business Associate provides a service to, or performs a
function on behalf of, Health Net and, in connection therewith, uses or
discloses Protected Health Information including Electronic Protected
Information (“EPHI”) (collectively (“PHI”) , that is subject to protection under
the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and
certain privacy and security regulations found at 45 CFR Parts 160 through 164
(“HIPAA Regulations”);

 

B. Any entity which creates or receives PHI from or on behalf of Health Net is a
business associate, as defined in the HIPAA implementing regulations, 45 C.F.R.
Parts 160 and 164;

 

C. Pursuant to the HIPAA Regulations, all business associates of Health Net must
agree in writing to certain mandatory provisions regarding the safeguarding, use
and disclosure of PHI; and

 

D. The purpose of this Addendum is to satisfy the requirements of the HIPAA
Regulations, including, but not limited to, business associate contract
requirements set forth at 45 C.F.R. § 164.308(b)(1) and § 164.314(a) and §
164.504(e), as they may be amended from time to time.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties agree as follows:

 

1. Definitions. Unless otherwise provided in this Addendum, capitalized terms
have the same meaning as set forth in the HIPAA Regulations, 45 C.F.R. Parts 160
and 164.

 

2. Scope of Safeguards, Use and Disclosure of Protected Health Information.
Except as otherwise limited in this Business Associate Addendum, Business
Associate shall as set forth below safeguard, use and disclose PHI solely to
provide the services, or perform the functions, described in the Current
Contract. Business Associate, to the full extent applicable, shall ensure that
its directors, officers, employees, contractors and agents shall:

 

  (A) Not use or further disclose PHI other than as permitted or required by
this Business Associate Addendum or as Required By Law.

 

  (B) Implement all administrative, physical and technical safeguards as set
forth in Schedule A to protect the confidentiality and integrity of the PHI that
it creates, receives, maintains or transmits and to prevent use or disclosure of
PHI other than as provided by this Business Associate Addendum.

 

  (C) Mitigate, to the extent practicable, any harmful effect that is known to
Business Associate of a safeguard, use or disclosure of PHI by Business
Associate in violation of the requirements of this Business Associate Addendum.

 

  (D) Report promptly to Health Net’s designated Privacy Officer any use or
disclosure of PHI not provided for by this Business Associate Addendum of which
Business Associate becomes aware.

 

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  (E) Require contractors or agents to whom Business Associate provides PHI
received from, or created or received by Business Associate on behalf of, Health
Net, to agree to the same safeguards, restrictions and conditions that apply to
Business Associate with respect to such PHI under this Business Associate
Addendum.

 

  (F) Provide to Health Net or, as directed by Health Net, to an Individual, in
the time and manner designated by Health Net, any information necessary to allow
Health Net to respond timely to a request by an Individual for a copy of the
Individual’s PHI pursuant to 45 C.F.R. § 164.524.

 

  (G) Maintain for a period of six (6) years all Designated Record Sets relating
to PHI received from, or created or received by Business Associate on behalf of,
Health Net.

 

  (H) Maintain for a period of six (6) years records of all disclosures of PHI,
other than for the purpose(s) set forth in this Business Associate Addendum,
including the date, name of recipient, description of PHI disclosed and purpose
of disclosure.

 

  (I) Provide to Health Net or, as directed by Health Net, to an Individual, in
the time and manner designated by Health Net, any necessary information
collected in accordance with Section 2(H) of this Business Associate Addendum in
order to allow Health Net to respond timely to a request by an Individual for an
accounting of the disclosures of the Individual’s PHI pursuant to 45 C.F.R.
§ 164.528.

 

  (J) Make any amendments to PHI that Health Net directs or agrees to pursuant
to 45 C.F.R. § 164.526 at the request of Health Net or an Individual in the time
and manner designated by Health Net.

 

  (K) Make reasonable efforts to implement any restriction of the use or
disclosure of PHI that Health Net has agreed to as described under Section 3(C).
this Business Associate Addendum.

 

  (L) As required by 45 CFR Part 164, Subpart C with respect to EPHI, implement
administrative, physical, and technical safeguards that are set forth in
Schedule A to protect the confidentiality, integrity, and availability of the
EPHI that Business Associate creates, receives, maintains, or transmits on
behalf of Health Net.

 

  (M) As required by 45 CFR Part 164, Subpart C with respect to EPHI, ensure
that any agent, including a subcontractor, to whom Business Associate provides
EPHI, agrees to implement, as applicable, these safeguards to protect the EPHI.

 

  (N) As required by 45 CFR Part 164, Subpart C with respect to EPHI, report to
Health Net any Security Incident of which Business Associate becomes aware.

 

  (O)

Make Business Associate’s internal practices, books, and records relating to the
safeguards, use and disclosure of PHI received from, or created or received by
Business Associate on behalf of, Health Net available to Health Net or, at the
request of Health Net, to the Department of Health and Human Services (“DHHS”),
in a time and manner designated by Health Net or DHHS, for purposes of
determining Health Net’s compliance with the HIPAA Regulations; provided that,
in all events, Business Associate shall immediately notify Health Net upon
receipt by Business Associate of any request

 

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received from DHHS relating to Health Net’s compliance with the HIPAA
Regulations and shall provide Health Net with copies of any materials provided
to DHHS.

 

  (P) Business Associate agrees that with respect to any and all PHI received
from Health Net or created or received by Business Associate on behalf of Health
Net that Business Associate maintains, or which is maintained by any contractor
or agent of Business Associate, in any form (collectively for this Section
referred to as “Health Net PHI”) and is no longer needed to perform services
under the Current Contract, or, at any time upon Health Net’s request and upon
termination of the Current Agreement(s), Business Associate will return or
destroy all Health Net PHI, and shall retain no copies of such Health Net PHI;
provided that if such return or destruction is not feasible, in Health Net’s
reasonable discretion, Business Associate shall extend the protections of this
Business Associate Addendum to the Health Net PHI and limit further uses and
disclosures to those purposes that make the return or destruction of the Health
Net PHI infeasible. A senior officer of Business Associate shall certify in
writing to Health Net, within five (5) days after termination, that all PHI has
been returned or destroyed as provided above and that Business Associate retains
no copies of PHI in any form; and

 

  (Q) Allow Health Net, upon reasonable notice, to inspect Business Associate’s
procedures and practices with respect to compliance with the terms of this
Business Associate Addendum; provided, however, that Health Net has no duty to
inspect and its decision not to inspect does not relieve Business Associate of
its compliance responsibility.

 

3. Obligations of Health Net. To assist Business Associate in the proper use and
disclosure of PHI, Health Net shall:

 

  (A) Provide Business Associate with the notice of privacy practices that
Health Net produces in accordance with 45 C.F.R. § 164.520, as well as any
changes to such notice.

 

  (B) Provide Business Associate with any changes in, or revocation of,
permission by an Individual to use or disclose PHI, if such changes affect
Business Associate’s permitted or required uses and disclosures.

 

  (C) Notify Business Associate of any restriction on the use or disclosure of
PHI that Health Net has agreed to in accordance with 45 C.F.R. § 164.522; and

 

  (D) Not request Business Associate to use or disclose PHI in any manner that
would not be permissible under the HIPAA Regulations if the PHI were to be so
used or disclosed by Health Net.

 

4. Standard Transactions. To the extent Business Associate conducts Standard
Transaction(s) on behalf of Health Net, Business Associate shall, without
limitation, comply with the HIPAA Regulations, “Administrative Requirements for
Transactions,” 45 C.F.R. § 162.100 et seq., and shall not: (a) Change the
definition, data condition or use of a data element or segment in a standard;
(b) Add any data elements or segments to the maximum defined data set; (c) Use
any code or data elements that are either marked “not used” in the standard’s
implementation specification or are not in the standard’s implementation
specification(s); or (d) Change the meaning or intent of the standard’s
implementation specifications.

 

5.

Termination for Breach. Health Net shall have the right to terminate the Current
Contract upon written notice to Business Associate specifying the effective date
of termination if Business

 

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Associate materially breaches this Business Associate Addendum; provided that
Health Net shall provide such notice not later than six (6) months after Health
Net has actual notice of Business Associate’s material breach of this Business
Associate Addendum, and further provided that Health Net’s remedies under this
Business Associate Addendum and the section(s) of the Current Contract related
to termination, if any, shall be cumulative.

 

6. Survival of Terms. The obligations of Business Associate under Sections 2(F),
2(G), 2(H), 2(I) and 2(P) of this Business Associate Addendum shall survive the
termination or expiration of the Current Contract.

 

7. Injunctive Relief. Business Associate agrees that the remedies at law for any
breach by it of the terms of this Business Associate Addendum may be inadequate
and that monetary damages resulting from such breach may not be readily
measured. Accordingly, in the event of a breach or threatened breach by Business
Associate of the terms of this Business Associate Addendum, Health Net shall be
entitled to seek immediate injunctive relief. Nothing herein shall prohibit
Health Net from pursuing any other remedies available to it for such breach, and
Health Net’s rights under this Business Associate Addendum and the sections of
the Current Contract related to injunctive relief, if any, shall be cumulative.

 

8. Amendment of Addendum. In the event of a material change in the HIPAA
Regulations or state law affecting safeguards or the use or disclosure of PHI,
or amendments for new or changed Standard Transactions or Identifiers, Health
Net may amend this Business Associate Addendum and the Current Contract as
necessary to comply with the change in the law or regulation and such amendment
shall become effective sixty (60) days after receipt by Business Associate,
provided any such change shall be subject to the Change Control Process. Health
Net’s rights under this Addendum and the section(s) of the Current Contract
related to amendments, if any, shall be cumulative.

 

9. Notice of Investigation or Lawsuit and Indemnification. Business Associate
shall notify Health Net immediately upon receipt of notice of an investigation
or of a lawsuit filed against Business Associate related to or arising from the
use or disclosure of PHI by Business Associate pursuant to this Business
Associate Addendum.

 

10. Confidentiality. Notwithstanding the foregoing, PHI shall not be included
within the definition of “confidential information” in the section(s) of the
Current Contract related to protection of confidential information, if any, as
Business Associate’s obligations with respect to PHI are set forth in this
Business Associate Addendum.

 

11. State Law Requirements. To the extent that state law applicable to Business
Associate pursuant to Section 27.5 of the Current Contract is more stringent
than the HIPAA Regulations, any safeguard, use or disclosure of PHI by Business
Associate shall be made in accordance with such state law.

 

12. Interpretation. Any ambiguity in this Business Associate Addendum shall be
resolved in favor of a meaning that permits Health Net to comply with the HIPAA
Regulations.

 

13. Effective Date. This Business Associate Addendum shall be effective on the
Effective Date of the Current Contract.

* * * * *

 

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SCHEDULE L

DISENGAGEMENT ASSISTANCE

 

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SCHEDULE L

Disengagement Assistance

 

1. INTRODUCTION

 

1.1 Disengagement Assistance, Generally

(a) This Schedule describes the Disengagement Assistance (as defined in
Section 2.1(l) of the General Terms and Conditions) that Supplier is required to
carry out in connection with the cessation of any Services or the expiration or
earlier termination (for any reason) of this Agreement to facilitate the orderly
wind-down of the affected Services and, where applicable, migration of the
affected Services from Supplier to Health Net and/or its designee(s), as
directed by Health Net.

(b) Disengagement Assistance shall be deemed to be Services, and Supplier shall
provide such Disengagement Assistance in accordance with Service Levels and
otherwise in accordance with this Agreement, including the terms of this
Schedule L, unless the Parties expressly agree otherwise in the Disengagement
Plan described below. Disengagement Assistance will be provided by Supplier as
requested by Health Net, and pursuant to the Disengagement Plan, as defined in
Section 1.2.

 

1.2 Disengagement Plan

(a) Disengagement Assistance will be provided pursuant to a mutually agreed
plan, which will include a plan and schedule for (i) migrating performance of
the affected Services to Health Net and/or a third party service provider
designated by Health Net (or winding down the affected Services, as applicable),
(ii) to the extent requested by Health Net, the transfer of the corresponding
employees and contractor personnel to one or more of such entities as described
in Section 16.6(a)(i) of the General Terms and Conditions, (iii) to the extent
requested by Health Net, the transfer of the corresponding assets to one or more
of such entities as described in Sections 12 and 16.6(a)(iii) and (iv) of the
General Terms and Conditions, (iv) the staff roll-off schedule for the Supplier
Personnel performing the affected Services; and (v) other information as set
forth in this Schedule L (the “Disengagement Plan”). The Disengagement Plan will
include Supplier’s plan for providing, to Health Net and/or its designee,
reasonable training in the performance of the affected Services.

(b) The Parties will develop the Disengagement Plan as described below promptly
upon written request from Health Net to commence development of such
Disengagement Plan.

(c) The Disengagement Plan will focus on Supplier’s performance of the
Disengagement Assistance Services described in this Schedule L and is intended
to be a component of Health Net’s (and if applicable its designee’s) master plan
for transferring responsibility for the Services to Health Net (or its
designee). Supplier will prepare the proposed Disengagement Plan for Health
Net’s review, comment and mutual agreement. Supplier shall provide other
information regarding the affected Services or Supplier’s performance of
Disengagement Assistance with respect to the affected Services that may be
reasonably requested by Health Net in connection with Health Net’s review and
comment on the

 

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Disengagement Plan. Supplier shall identify to Health Net (i) known risks
associated with any Health Net proposed changes to the Disengagement Plan
(including any potential disruption in the affected Services) and suggested
means by which such risks may be mitigated, and (ii) operational constraints
that may conflict with Health Net’s proposed changes to the Disengagement Plan.

(d) Once the Disengagement Plan has been agreed upon, both Parties will comply
with it, subject to Health Net’s right to extend the Disengagement Assistance
Period as provided in this Agreement.

 

2. HEALTH NET ACCESS TO PERSONNEL, EQUIPMENT, THIRD PARTY SERVICE CONTRACTS AND
SOFTWARE LICENSES

 

2.1 Applicable Requirements and Access

(a) Definition of Resources. At no additional cost, Supplier will provide to
Health Net and/or any designated third party service provider:

(i) Timely access to and use of Equipment, Software (as provided in the General
Terms and Conditions), Supplier Personnel, third party contracts (including
leases, licenses and contracts), systems, and sites from which the affected
Services were provided, documentation (including the updated Procedures Manual),
and other materials or resources that are used to provide the affected Services
(collectively the “Resources”) to fulfill the requirements of Sections 2.3
through 2.8 below; and

(ii) Information concerning the Resources as reasonably requested by Health Net,
subject to the confidentiality obligations of this Agreement and any applicable
Laws).

(b) Transfer of Resources Generally.

(i) Supplier’s obligations relating to obtaining Required Consents and similar
rights with respect to Resources are set forth in Sections 11.10, 12 and
16.6(a)(iii) and (iv) of the General Terms and Conditions.

(ii) Supplier shall provide all reasonable assistance required for, and shall
take all reasonable actions (including by executing documents) necessary to
effect, the transfer of Resources as contemplated in this Section 2. Health Net
shall reasonably cooperate with Supplier in effecting such transfer of
Resources, and shall use Commercially Reasonable Efforts to cause any successor
supplier to do the same, in each case with due consideration given to minimizing
the costs to Supplier and Health Net associated with such transfer of Resources.
Supplier shall use Commercially Reasonable Efforts to minimize the costs
associated with the transfer of, or assumption of responsibility for, Resources
pursuant to this Section 2.

(iii) Unless otherwise requested by Health Net, the effective date of any
transfer of Resources pursuant to this Section 2 shall be the cutover date for
the corresponding affected Services; provided, however, that any such transfer
shall not take place before the cutover date for the corresponding affected
Services unless mutually agreed by the Parties in writing; and

 

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(iv) Unless otherwise agreed by the Parties in writing, Health Net will not
assume, and shall not be liable for, any of Supplier’s or any of its Affiliates’
or Subcontractors’ obligations to any third party with respect to any
non-personnel Resource owned, leased, licensed, or contracted for by Supplier or
any of its Subcontractors (such obligations collectively the “Supplier
Non-Personnel Resource Obligations”), and Supplier shall be responsible for
performing such Supplier Non-Personnel Resource Obligations; provided, however,
that for any such Resource transferred to Health Net or its designee pursuant to
this Section 2, Health Net shall be responsible for such obligations to the
limited extent such obligations (A) arise under a contract that is assigned to
Health Net or its designee under this Section 2, and (B) arise after the
effective date of assignment of such contract under this Section 2.

 

2.2 Personnel

Supplier will provide to Health Net:

(a) A list of Core Personnel and associated Core Personnel Information in
accordance with Section 6 of Schedule E; and

(b) The following additional information relating to Supplier Personnel:

(i) The approximate number of current Supplier Personnel that are not Core
Personnel, the estimated number of full-time equivalents represented by such
group, and the number of heritage Health Net employees within such group; and

(ii) A current account organizational chart that identifies all Supplier
Personnel, and summarizes their organizational relationship among one another,
including the Core Personnel (e.g., solid-line versus dotted-line reporting from
one person to another), and which specifically distinguishes the Core Personnel
from other Supplier Personnel. For the Core Personnel, such chart shall include
roles, responsibilities, and authority of such personnel.

(c) Health Net or its designee may undertake to recruit and hire any Supplier
Personnel in accordance with Section 16.6(a)(i) of the General Terms and
Conditions.

 

2.3 Equipment

(a) At Health Net’s request, Supplier will provide information to Health Net or
its designee concerning the Equipment owned or leased by Supplier (or its
Affiliate or Subcontractor) that is used primarily to perform the affected
Services being terminated, which shall include a complete inventory of such
Equipment (in the form and format agreed in Schedule W (Reports)) specifying
make, model, serial number, the corresponding affected Services such Equipment
is used to provide, location, purchase date or lease start date and lease term,
net book value and other reasonable information requested by Health Net. Health
Net may audit the accuracy of such information in accordance with Section 18 of
the General Terms and Conditions.

(b) As requested by Health Net, Supplier will sell to Health Net or its designee
some or all of the owned Equipment and will assign to Health Net some or all of
the leased Equipment in accordance with Section 16.6(a)(iii) of the General
Terms and Conditions. Supplier will convey the purchased Equipment with all
available user and other documentation to Health Net

 

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free of any liens, claims or encumbrances, and will execute a bill of sale in a
mutually agreed form to evidence the conveyance. The aggregate purchase price
will be as set forth in the bill of sale, attached as Schedule T. All Equipment
purchased will be on an “AS IS” basis with no representations or warranties from
Supplier; provided, however, that all relevant manufacturer and retailer
warranties will be transferred and assigned to Health Net to the extent they
exist and are able to be transferred in such underlying agreements. If and to
the extent requested by Health Net in connection with Disengagement Assistance
for any affected Services, Supplier will obtain Health Net’s prior written
approval before (A) taking any action with respect to the removal, reassignment,
transfer, disabling or disposal of any dedicated Equipment, or (B) amending,
terminating or extending the terms of (or entering into new) agreements
governing such Equipment.

 

2.4 Third Party Service Contracts

(a) At Health Net’s request, Supplier will provide information to Health Net or
its designee concerning the Third Party Service Contracts and licenses in
Supplier’s (or any of its Affiliate’s or Subcontractor’s) name that are used to
perform the affected Services (other than Equipment leases and maintenance
agreements for such Equipment, which are governed by Section 2.3 above, but
including any third party maintenance and support services agreements for
Software), which shall include a complete inventory of such contracts (in MS
Excel format) specifying the third party, the nature of the contract ), the
corresponding Services such contract is used to provide, term and expiration
date, and to the extent permitted in such underlying agreements, other
reasonable information requested by Health Net. Health Net may audit the
accuracy of such information in accordance with Section 18 of the General Terms
and conditions.

(b) Supplier will transfer or make available to Health Net or its designee such
third party agreements in accordance with Sections 12 and 16.6(a)(iii) and
(iv) of the General Terms and Conditions. If and to the extent requested by
Health Net in connection with Disengagement Assistance for any affected
Services, Supplier will obtain Health Net’s prior written approval before
amending, terminating or extending the terms of (or entering into new)
agreements governing such Third Party Service Contracts.

 

2.5 Telephone Numbers, Domain Names and IP Addresses.

(a) At Health Net’s request, Supplier will provide information to Health Net or
its designee concerning any telephone numbers, domain names and IP addresses
(i) for which Supplier or a Subcontractor is the customer of record, and
(ii) that are exclusively dedicated for use in the provision of the affected
Services (e.g., help desk numbers), which shall include (A) a complete inventory
of such numbers, domain names and IP addresses (in MS Excel format), (B) for
telephone numbers, the corresponding Services each of such numbers is used to
provide, the corresponding network provider and country of origin, and (C) other
reasonable information requested by Health Net. Health Net may audit the
accuracy of such information in accordance with Section 18 of the General Terms
and Conditions.

(b) At Health Net’s request, Supplier shall cause each of the telephone numbers,
domain names and IP addresses described in Section 2.5(a) that are exclusively
dedicated for use in the provision of the affected Services to be ported to
Health Net or its designee as of the

 

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corresponding cutover date(s), thereby making Health Net or its designee the
customer of record for such numbers.

 

2.6 Proprietary Networks.

To the extent that Supplier has involved a proprietary network in the provision
of affected Services, Supplier will provide Health Net and its designees access
and use of such network, subject to the terms of this Agreement as part of
Disengagement Assistance, and subject to the Disengagement Plan, in order to
allow Health Net and its designees to transition to an alternative arrangement
selected by Health Net.

 

2.7 Software Licenses

(a) At Health Net’s request, Supplier will provide information to Health Net or
its designee concerning the Software used for the provision of the affected
Services (such Software collectively the “Affected Software”), which shall
include a complete inventory of such Software (in MS Excel format), the
corresponding licensor of such Software, a description of such Software, the
affected Services each of such Software is used to provide, and other
information reasonably requested by Health Net. Health Net may audit the
accuracy of such information in accordance with Section 18 of the General Terms
and Conditions.

(b) If Health Net is entitled under this Agreement, including as provided in
Section 12.7 of the General Terms and Conditions, to a sublicense or other right
not previously granted to Use any Software owned or licensed by Supplier (or its
Affiliate or Subcontractor), Supplier will grant such sublicense or other right.

 

2.8 Unidentified Assets.

(a) For any affected Services, if after the corresponding cutover date, any
(i) Equipment (either owned or leased by Supplier) or third party agreements
that are dedicated for use in the provision of the affected Services; or
(ii) Affected Software is discovered that was not identified by Supplier
pursuant to Sections 2.3 through 2.7 (each, an “Unidentified Asset”), Supplier
shall provide Health Net or its designee with notice of such discovery (such
notice for any such Unidentified Asset a “Discovery Notice” for such asset),
which notice shall provide a description of the corresponding Unidentified Asset
which includes the information described in Sections 2.3(a), 2.4(a), 2.5(a), and
2.7(a), as applicable.

(b) Subject to the provisions of Section 12 of the General Terms and Conditions,
as of each corresponding cutover date, Supplier herby grants to Health Net and
its designees access to, and use of the Unidentified Resources; provided,
however, that with respect to any Unidentified Asset that is Equipment leased by
Supplier or a third party agreement, Supplier may terminate the lease or
agreement corresponding to such Unidentified Asset, but only after: (i) Supplier
has provided Health Net with a Discovery Notice for such Unidentified Asset,
(ii) Supplier has presented Health Net with a complete copy of the corresponding
agreement, to the extent permitted in such underlying agreement, and has
provided Health Net with the opportunity to exercise its rights pursuant to
Sections 2.3(b) (with respect to Equipment leases) and 2.4(b) (with respect to
other third party agreements); and (iii) Health Net has notified Supplier that
it does not wish to exercise its rights pursuant to Sections 2.3(b) (with
respect to Equipment leases) and 2.4(b) (with respect to other third party
agreements). For any such

 

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Unidentified Asset that is Equipment leased by Supplier or a third party
agreement, Health Net shall provide the notification as to whether it wishes to
accept assignment of the corresponding lease or agreement within sixty (60) days
after Supplier’s delivery of the corresponding agreement to Health Net pursuant
to clause (ii) of this Section 2.8(b).

 

3. DISENGAGEMENT ASSISTANCE IMPLEMENTATION AND EXECUTION

 

3.1 General Support for Disengagement Assistance Implementation.

(a) Supplier shall support the implementation of the Disengagement Plan by
performing its responsibilities relating to the Disengagement Assistance
(including performing any reasonably requested Disengagement Assistance relating
to the Disengagement Assistance, and performing Supplier’s responsibilities
described in the Disengagement Plan) in accordance with the Disengagement Plan.

(b) During the Disengagement Assistance and subject to the Change Control
Process, to the extent that Health Net requests Disengagement Assistance beyond
that which is set forth in the Disengagement Plan, Health Net will consult and
coordinate with Supplier, so as to mitigate the possibility of disrupting
Supplier’s provision of Services.

 

3.2 Supplier Disengagement Assistance Team.

Until the completion of the Disengagement Assistance, Supplier will assign an
individual to serve to manage and oversee Supplier’s support of Disengagement
Assistance activities (such position the “Supplier Disengagement Assistance
Lead”). The individual serving as the Supplier Disengagement Assistance Lead
shall be subject to Health Net’s prior written approval. The Supplier
Disengagement Assistance Lead will meet with his or her Health Net counterparts
on a weekly basis (or more frequently if requested by Health Net), and will
serve as an escalation point for issues relating to the Disengagement
Assistance. In addition, Supplier shall assign other individuals to the
Disengagement Assistance team as reasonably necessary to support Disengagement
Plan.

 

3.3 Operational Transition.

Supplier shall perform activities to facilitate the orderly migration and
transition of operational responsibility for the affected Services in a manner
to minimize interruption or adverse effect from Supplier’s operating
environment(s) to the replacement operating environment(s) of Health Net or its
designee, as reasonably directed by Health Net, and in accordance with
Supplier’s responsibilities under the Disengagement Plan and this Schedule L.
These activities shall include the following as set forth in the Disengagement
Plan or as otherwise reasonably requested by Health Net:

(a) Subject to the terms of Section 12 of the General Terms and Conditions,
providing to Health Net or its designee, as directed by Health Net,
machine-readable Source Code (to the extent required of Supplier under this
Agreement) and object code, data base, file, record layouts and field
descriptions with respect to the Health Net Software (and other Software, to the
extent Health Net is entitled to a license to the same), along with the

 

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documentation and associated program execution statements, and other similar
information necessary for the designee to execute Software for Health Net’s
benefit;

(b) To the extent used to provide the Services and subject to Section 2.7,
providing available documentation and delivering program materials, including
source and object libraries, reference files, interface definitions,
specifications, implementation procedures relative to Health Net’s technical
environment, and embedded software;

(c) Delivering then-existing systems support profiles, change logs including
enhancement and maintenance, history, problem tracking/resolution documentation,
and scale, functional and complexity assessment analyses;

(d) Providing work volumes, staffing requirements, demand backlog and
information on historical performance for the Service Levels, and to the extent
available for each Equipment component or system, over the preceding six
(6) months;

(e) Identifying and documenting the demarcation points for each portion of the
affected Services, including any operating level agreements with other Health
Net or Supplier groups at those demarcation points and information regarding the
physical and virtual locations affected by the Disengagement Assistance;

(f) Providing copies of Health Net Data in Supplier’s or its Subcontractors’
possession with the respective data bases and files on electronic media as
specified by Health Net or its designee;

(g) Identifying work and projects expected to be in progress at the completion
of the Disengagement Assistance Period, and with respect to such work,
documenting current status (including Project budget information), stabilizing
for continuity during transition, and providing any reasonably required training
to qualified personnel to achieve transfer of responsibility;

(h) Providing the following information and services before the corresponding
cutover date(s):

(i) Provide available documentation used by Supplier to provide the affected
Services, including technical documentation necessary to provide continuity of
service during transition, in hard-copy or electronic media as indicated by
Health Net;

(ii) Provide Health Net with any help desk or service request tickets and
problem logs it does not already have, reporting back at least six (6) months
prior to the completion date of the Disengagement Assistance Period (but no
earlier than the Effective Date);

(iii) Identify, record and provide change control historical records including
release and maintenance levels for Systems Software;

(iv) After consultation with Health Net, discontinue all discretionary Software
changes;

(v) Provide and coordinate assistance in notifying outside vendors of the
procedures to be followed during the Disengagement Assistance;

 

Schedule L    L - 8    Health Net / IBM Confidential

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Final Execution Version

 

(vi) Review the organization, structure use and contents of all Software
libraries including those utilized for test, staging and production with Health
Net’s or its designee’s operations staff;

(vii) Assist Health Net or its designee in the analysis of the direct access
storage capacity required to accommodate Software libraries and Health Net’s
data files;

(viii) Provide reasonable assistance to Health Net or its designee in
transferring operational standards including naming and addressing conventions;

(ix) Subject to Section 2.7, document and deliver all tools and databases used
to provide the Services, including those for tracking projects and service
information requests, and those used for knowledge transfer;

(x) Subject to Section 2.7, provide the Source Code for the Software (including
third party Software if permitted by applicable licenses) in a form reasonably
requested, and deliver the such Source Code, technical specifications and
materials, and user documentation in form and format in Suppliers possession for
the Software to Health Net or its designee;

(xi) At Health Net’s request and to the extent applicable, deliver the materials
required to cause and control program execution and associated appropriate
program execution documentation and procedures to Health Net or its designee;

(xii) Make arrangements for any physical de-installation, transportation, and
relocation of Equipment and physical assets to be performed as part of the
Disengagement Assistance;

(xiii) Provide reasonably available documentation and diagrams for the voice,
data, video, and other communications capabilities, including asset information
and configuration settings (including configurations, router tables, IP
addressing schema, managed device thresholds) for all configurable items
(including media access, media, routing, bridging and switching devices and
other equipment and software providing communications service delivery and
management functions); and

(xiv) Provide interim Health Net Data, in such format and on such media as
reasonably requested by Health Net;

(xv) Cooperate and assist Health Net and its designees in achieving a state of
operational readiness, as such readiness is reasonably determined by evaluation
the Services; and

(xvi) As possible at no additional charge to Supplier by third parties, transfer
membership to Health Net in all associations, forums, or other trade or industry
entities related to the affected Services;

(i) Providing the following Services on or before the corresponding cutover
date(s):

(i) Copy and deliver to Health Net all requested Health Net Data files and other
Health Net Confidential Information (including content listings and with respect
to control

 

Schedule L    L - 9    Health Net / IBM Confidential

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Final Execution Version

 

file information, printouts of the same), and subject to Section 2.7, copy and
deliver Source Code listings;

(ii) In conjunction with Health Net or its designee, conduct a rehearsal of any
migration that is part of the Disengagement Assistance prior to the cutover date
as scheduled by Health Net, and provide any reasonably required corrective
action identified during the rehearsal;

(iii) Provide reasonable assistance to Health Net or its designee in making
Health Net Data files available on the storage devices of the new environment;

(iv) Provide reasonable assistance to Health Net or its designee with the
transmission or movement of data from then-existing databases to the new
environment;

(v) Provide an image copy (and mirrored DASD volumes if available) of each
operating system environment (in dump/restore or image mode, as applicable to
the operating system platform);

(vi) Reasonably assist in the installation and operation of such software,
equipment or communications capabilities that may be necessary to allow for the
synchronous or asynchronous replication of Health Net Data from Supplier
facilities to the facilities of Health Net or its designee;

(vii) Provide reasonable assistance to Health Net or its designee with the
turnover of operations and the execution of parallel testing and parallel
operations;

(viii) Assist Health Net or its designee in the identification and removal of
security access credentials for Supplier employees, agents and designees from
Disengagement Assistance computing communications devices and associated
software; and

(ix) Transfer responsibility to Health Net or its designee for off-site media
and document storage; and

(j) Providing, after the corresponding cutover date(s) and subject to
Section 3.4, additional assistance as reasonably requested by Health Net,
including:

(i) Returning to Health Net (or if requested by Health Net destroying) any
remaining Health Net property in Supplier’s possession or under Supplier’s
control, including remaining reports, data and Health Net Data or Health Net
Confidential Information;

(ii) Transferring to Health Net any tape media in Supplier’s or its
Subcontractors’ possession used solely to store Health Net Data; and

(iii) Vacating Health Net Facilities in a timely manner.

 

3.4 Organizational Transition.

Supplier shall provide reasonable assistance required to transfer, in accordance
with the Disengagement Plan, the information developed during the Term to
support the delivery of the

 

Schedule L    L - 10    Health Net / IBM Confidential

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Final Execution Version

 

Affected Services in accordance with this Agreement (including Section 12 of the
General Terms and Conditions). Supplier’s responsibilities shall include, as
Health Net requests:

(a) Providing the then-existing documentation, including functional organization
charts, operating level agreements with third-party contractors, phone trees,
contact lists, and standard operating procedures;

(b) Transferring physical and logical security processes and tools, including
cataloguing and tendering all badges and keys, documenting ownership and access
levels for all passwords, and instructing Health Net or its designee in the use
and operation of security controls; and

(c) Revoking Supplier Personnel access to Health Net Facilities (or secure
locations within such facilities), Health Net Data, Health Net Confidential
Information, Equipment, Software and other systems, processes and tools, as such
Supplier Personnel are transitioned away from Health Net’s account or as the
functions performed by such Supplier Personnel are transitioned away from
Supplier, and accordingly, corresponding access to such items is no longer
required.

 

3.5 Business Continuity Transition.

Supplier shall provide, in accordance with the Disengagement Plan, reasonable
assistance to support Health Net’s requirements for business continuity for the
affected Services during the Disengagement Assistance and, to the extent
business continuity Services are among the affected Services, to transfer
responsibility to enable Health Net or its designee to provide similar services
as part of the Disengagement Assistance. Supplier’s responsibilities shall
include, as Health Net requests:

(a) Supplying the then existing documentation used by Supplier to provide
business continuity Services with respect to the affected Services, including
the business continuity plans, testing procedures and frequencies including the
reports of the results of such tests, redundancy diagrams and other plans;

(b) Informing Health Net or its designee of then-current policies and procedures
with regard to backup and business continuity for the affected Services;

(c) Providing for overlapping coverage or support in accordance with the
Disengagement Plan through the Disengagement Assistance to minimize disruption
in the event of an outage during that period;

(d) In accordance to the Disengagement Plan and to the extent Health Net Data
corresponding to the affected Services is replicated to another facility,
Supplier shall transfer such data to Health Net or its designee, and upon Health
Net’s request, Supplier shall provide reasonable assistance to Health Net in
developing equipment requirements and other requirements for relocating such
data.

 

Schedule L    L - 11    Health Net / IBM Confidential

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Final Execution Version

 

3.6 Knowledge Transfer.

(a) Supplier will provide for a transfer of knowledge regarding the affected
Services, Health Net’s requirements, and related topics, so as to facilitate the
provision of the affected Services by Health Net or its designee. Supplier’s
responsibilities shall include, as Health Net requests:

(i) Providing Health Net and/or its designee with information regarding the
affected Services that is necessary to implement the Disengagement Plan, and
providing such information regarding Services as necessary for Health Net or its
designee to assume responsibility for continued performance of the affected
Services in an orderly manner so as to minimize disruption in operations.
Pursuant to the Agreement, information that Supplier is obligated to provide
under this Section 3.6 shall include: (A) relevant available documentation;
(B) the Procedures Manual; (C) available schedules, frequencies, work product
and related information for activities and deliverables as requested by Health
Net; (D) current operating level arrangements with third-party vendors of goods
and services to the extent relevant to the Affected Services; (E) available
security plans and procedures; and (F) key support contacts (names and phone
numbers) of Health Net and third-party personnel, and of Supplier Personnel
during the Disengagement Assistance;

(ii) Providing reasonable training to Health Net’s or its designee’s personnel
in the performance of those Services that are to be transferred;

(iii) Explaining the particular Supplier implementation of the processes
enumerated in Schedule A of this Agreement, and the human, procedural and
technical interfaces to and interactions with Health Net (including the
Procedures Manual) to Health Net or its designee’s operations staff; and

(iv) Responding to inquiries from Health Net regarding the Affected Services,
including by providing reasonable access (e.g., by telephone) to active and
still employed Supplier Personnel who were performing such affected Services at
the cutover date(s).

(b) Supplier’s performance of the obligations described in Section 3.6(a) shall
be in accordance with a knowledge transfer plan which Supplier shall include in
the Disengagement Plan for the affected Services (each such plan a “Knowledge
Transfer Plan”). Each Knowledge Transfer Plan will be aligned with the
Disengagement Plan, and shall, at a minimum, describe the overall knowledge
transfer process, including: (i) Supplier’s overall approach; (ii) major
activities and schedules for the knowledge transfer; (iii) the Supplier
Personnel who will participate in the knowledge transfer; (iv) a detailed
description of the documentation that Supplier will provide in connection with
the knowledge transfer; and (v) designation of resources required of Health Net
and associated schedules. Each Knowledge Transfer Plan shall be provided to
Health Net for its review, comment, and approval. The reasonable comments or
suggestions of Health Net will be incorporated as applicable into each such
Knowledge Transfer Plan and Health Net’s final approval will be obtained prior
to implementation of the Knowledge Transfer Plan.

 

Schedule L    L - 12    Health Net / IBM Confidential

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Final Execution Version

 

3.7 Financial Transition.

As of the completion date for Disengagement Assistance for any affected
Services, and continuing for a period of three (3) months thereafter (each such
period a “Financial Reconciliation Period”), Supplier will reasonably cooperate
with Health Net, within the defined three-month period, to achieve a final
reconciliation with respect to the areas identified in this Section 3.7.

(a) Supplier Invoicing. Supplier shall submit its invoice for all charges and
credits applicable to the affected Services through the corresponding cutover
date, which shall be payable in accordance with Schedule C. Effective as of the
corresponding cutover date for any affected Services, each Party will submit to
the other reconciliation information (including as reasonably requested by the
other Party) to reconcile any outstanding charges or credits, and each Party
shall work diligently and in good faith to achieve a final reconciliation of
such charges and credits by the end of the Financial Reconciliation Period.

(b) Third Party Contract Invoices.

(i) The Parties acknowledge the possibility that invoices for third-party
contracts (e.g., Third Party Service Contracts or Equipment leases) used to
provide the affected Services and transferred to Health Net or its designees
pursuant to Section 2 may be misdirected by third-party vendors after the
effective date of transfer, and provided to Supplier instead of Health Net or
its designee. Supplier shall provide any such invoices in their original form to
Health Net in a timely manner.

(ii) Supplier shall reimburse Health Net for third party products or services,
if any, for which Supplier has Financial Responsibility, and that are used to
provide the affected Services before the cutover date but invoiced to Health Net
or its designee.

(iii) Health Net shall reimburse Supplier for those payments made by Supplier
under those third party contracts assigned to Health Net or its designee
pursuant to Sections 2.3 (with respect to Equipment leases) and 2.4 (with
respect to third party agreements), to the extent (A) the payments are for
charges for products or services provided or performed on or after the
corresponding cutover date, and (B) Supplier paid the third-party invoice for
such services for periods that extend past the corresponding cutover date. For
any such reimbursement to be made by Health Net pursuant to this
Section 3.7(b)(iii), Supplier shall provide a copy of the corresponding invoice,
and if requested by Health Net, the original invoice and other reasonable backup
information and documentation; provided, however, that if the reimbursement
arises under an invoice for which Supplier or a Subcontractor is designated as
the entity required to make payment, Supplier shall present an invoice in
Supplier’ name to Health Net for reimbursement of the corresponding charges, and
shall provide a copy of the corresponding third-party invoice in support of the
same.

(iv) On or before a corresponding cutover date, Supplier shall provide Health
Net with information reasonably requested by Health Net regarding any third
party contracts used to provide the affected Services such that Health Net can
reasonably validate that the corresponding third party vendor has invoiced, and
Supplier has paid, any charges arising under such contracts before such cutover
date.

 

Schedule L    L - 13    Health Net / IBM Confidential

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Final Execution Version

 

(c) Asset Acquisitions. Sections 2.3 through 2.8 describe terms pursuant to
which Health Net or its designee may acquire certain resources used to provide
the affected Services. Each Party shall work diligently and in good faith to
achieve, by the end of the Financial Reconciliation Period, a final
reconciliation of the financial issues arising from any transfer of such
resources to Health Net or its designee under such provisions.

 

4. OTHER TERMS REGARDING DISENGAGEMENT ASSISTANCE

 

4.1 Commercially Reasonable Efforts

The Disengagement Plan will provide for each Party to use Commercially
Reasonable Efforts to assist the other Party in the orderly termination of the
affected Services and the transfer of all Deliverables, work-in-progress, and
other items and materials, as may be specified in this Agreement (including
Sections 12 and 15 of the General Terms and Conditions and applicable project
plans or statements of work executed by the Parties under this Agreement) to
facilitate the orderly, non-disrupted business continuation of each Party.

 

4.2 Post-Disengagement Assistance Period

During the six (6) month period following the Disengagement Assistance Period,
Supplier will (a) use Commercially Reasonable Efforts to answer all reasonable
and pertinent written questions from Health Net regarding the Services and, if
Supplier has not already delivered to Health Net all Health Net-owned reports
and documentation in Supplier’s (or its Affiliates’ or subcontractors’)
possession, it will do so, and (b) continue to perform the financial transition
activities as set forth in Section 3.7.

 

4.3 Survival of Agreement

Disengagement Assistance will be deemed to be governed by the terms and
conditions of this Agreement notwithstanding its earlier termination or
expiration, other than any terms or conditions that do not reasonably apply to
the Disengagement Assistance.

 

4.4 Compensation

Health Net shall compensate Supplier for performing the Disengagement Assistance
Services in accordance with Section 16.6(c) of the General Terms and Conditions.

 

Schedule L    L - 14    Health Net / IBM Confidential

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SCHEDULE M

[INTENTIONALLY LEFT BLANK]

 

Schedule M    M - 1    Health Net / IBM Confidential

--------------------------------------------------------------------------------

 

Schedule N (Equipment)

 

Exhibit
Number

  

Description

  

Category
as Described in
Schedule S

  

Title on or
after
Effective Date

N-1    Health Net Owned Equipment to be Purchased by Supplier    n/a    Supplier
N-1-1    Desktops       N-1-2    Assets from GE Profile       N-1-3    Mid Range
Owned Assets       N-1-4    Mainframe Owned Assets       N-1-5    Voice Network
      N-1-6    Voice Call Manager       N-1-7    Voice Video Conferencing      
N-1-8    iSeries       N-2    Health Net Leased Equipment to be Assumed by
Supplier
(i.e., take assignment and title of Asset)    Assumed    Supplier N-3    Health
Net Owned Equipment that Health Net Will Retain    Retained    Health Net N-4   
Health Net Leased Equipment that Health Net Will Retain    Retained    Health
Net N-5   

Health Net Leased Equipment to be paid by Supplier and

retained in Health Net’s name

  

Managed as

Pass Through

   Health Net

 

Schedule N    N - 1    Health Net / IBM Confidential

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Final Execution Version

 

SCHEDULE O

HEALTH NET POLICIES AND PROCEDURES

 

Schedule O    O - 1    Health Net / IBM Confidential

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Final Execution Version

 

SCHEDULE O

HEALTH NET POLICIES AND PROCEDURES

In accordance with Section 5.4(c) of the General Terms and Conditions of the
Agreement, listed below are the Health Net Polices and Procedures which the
Parties acknowledge have been disclosed to Supplier by Health Net prior to the
Effective Date

 

A. SECURITY POLICIES

SECURITY POLICIES

 

** The “Folder” and “Filename” columns include references to the CD provided to
IBM containing these policies

 

Tower

  

Policy Name

  

Description

  

Category

  

Folder

  

Filename

Cross-Functional

   SOX404 - IT Key Controls    System and process controls to reduce financial
impacts and comply with SOX.    SOX Compliance    Auditing    SOX404 - IT Key
Controls (2008).xls

Cross-Functional

   SOX IT Controls    System and process controls to reduce financial impacts
and comply with SOX. A more comprehensive list than the one above.    SOX
Compliance    Auditing    All SOX IT Control 051308.xls

Data Center

   Database Security Policies    Oracle and DB2 control and security policies
pertaining to user access, rights, and DITSCAP restrictions.    Database
Security    DBA    Database Security Policies.doc

Data Center

   iSeries Team - Security Policies    documents the procedures related to
security for the iSeries systems    Mainframe Security    iSeries    AS400
Security Policy & Procedures.doc

Data Center

   AS-400 Security Policies & Procedures    Security Administration Policy &
Procedures documents user security, system security, monitoring and reporting   
Mainframe Security    iSeries    Security Procedures.doc

Data Center

   RACF Backup & Restore Procedure    The following policy and procedure is used
to describe the RACF database structure and weekly backup cycle    Database
Security    zSeries    RACF Backup and Restore Procedure.doc

Data Center

   RACF Extraordinary Access Request Procedure    The following procedure is
used to validate and selectively grant requests for extraordinary access to RACF
accounts.    User Accounts    zSeries    RACF Extraordinary Access Request
Procedure.doc

Data Center

   RACF FHP1 & HNP2 Password Standards    password standards    Password   
zSeries    RACF FHP1 & HNP2 Password Standards.doc

Data Center

   RACF FHP3 & HNP6 Password Standards    password standards    Password   
zSeries    RACF FHP3 & HNP6 Password Standards.doc

Data Center

   RACF HNP4 Password Standards    password standards    Password    zSeries   
RACF HNP4 Password Standards.doc

 

Schedule O    O - 2    Health Net / IBM Confidential

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Final Execution Version

 

Tower

  

Policy Name

  

Description

  

Category

  

Folder

  

Filename

Data Center

   RACF Identification Naming Standards    All RACF logon identification names
must conform to accepted naming convention and standards required for production
processing.    User Accounts    zSeries    RACF Identification Naming
Standard.doc

Data Center

   RACF RVARY Password Response Procedure    The following procedure is used to
respond to RACF message ICH702A or ICH703A. These messages are issued to the
S/390 system master console in response to a RACF RVARY command request.   
Password    zSeries    RACF RVARY Password Response Procedure.doc

Data Center

   Resetting Passwords for FTP Userids in RACF    The following procedure can be
used when a password is changed for a RACF FTP userid at the request of a client
   Password    zSeries    Resetting Passwords for FTP Userids in RACF.doc

Data Center

   Setting the RACF RVARY Password for the S/390 System    The following
procedure is used to set/change the RACF RVARY passwords.    Password    zSeries
   Setting the RACF RVARY Password for the OS390.doc

Data Center

   z_OS OFFSHORE Process    A new RACF group named OFFSHORE has been created
exclusively for Medical staff augmentation programmers located in India   
User Accounts    zSeries    z_OS OFFSHORE Process.doc

Data Center

   z_OS RACF Change Password Procedure    Procedure for user password changes   
Password    zSeries    z_OS RACF Change Password procedures.doc

Data Center

   z_OS Security Procedures    Security Administration Procedures for z/OS
Security Server (RACF) documents user security, system security, monitoring and
reporting    Mainframe Security    zSeries    z_OS Security Procedures version
3.doc

Data Center

   Security Administration Procedures    Security Administration Procedures for
Health Net Unix Systems documents user security, system security, monitoring and
reporting    Midrange Security    Unix    Security Administration Procedures -
OSG Unix V2.0.doc

Data Center

   HIPAA Procedures    The purpose of this document is to provide guidance to
all Information Technology Group (ITG) associates for protecting PHI in the
course of completing their job duties and responsibilities.    HIPAA    VMS   
HIPAA_Procedures.doc

Data Center

   Corporate Information Security Standards & Guidelines    These standards and
guidelines are intended to provide guidance to all Company users for protecting
Company information in carrying out their job responsibilities.    Information
Security    VMS    Information_Security_Standards.pdf

Data Center

   Network Security Data Storage on Home PC’s Policy    The policy at Health Net
to have a standard for using non-company owned PC’s when transferring
confidential information.    Data Storage    ISS    eNS3001POL - Network
Security Data Storage on Home PC’s.pdf

Data Center

   Network Security Electronic Transfer of Data Policy    The purpose of this
document is to define Health Net’s policy of prohibiting electronic file
transfers unless specifically allowed per an approved EFT Request Form    Data
Transfer    ISS    eNS3002POL - Network Security Electronic Transfer of Data.pdf

 

Schedule O    O - 3    Health Net / IBM Confidential

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Final Execution Version

 

Tower

  

Policy Name

  

Description

  

Category

  

Folder

  

Filename

Data Center    Network Security Electronic File Transfer Request Procedure   
The purpose of this document is to detail the procedure for Electronic File
Transfer (EFT) requests.    Data Transfer    ISS    eNS3002PRa - Network
Security Electronic File Transfer Request Procedure.pdf Data Center   
Electronic File Transfer (EFT) Request Form   

Form used to request the following:

1. Electronic File Transfers (EFT) to be performed by the EFT Team as a
scheduled job with external parties.

2. “Self-Service” File Transfers to be performed by the requesting entity (and
not by the EFT Team) with external parties.

   Data Transfer    ISS    eNS3002PRb - Network Security Electronic File
Transfer (EFT) Request FORM.pdf Data Center    Network Security Encryption of
Data Networks Policy    The purpose of this document is to explain encryption
standards required when transferring data through private Health Net, Inc. WAN
links    Data Encryption    ISS    eNS4002POL - Network Security Encryption of
Data Networks.pdf Data Center    Network Security Encryption of VPN Connections
Policy    The purpose of this document is to explain encryption standards
required when transferring data through Virtual Private Networking (VPN)
connections.    Data Encryption    ISS    eNS4003POL - Network Security
Encryption of VPN Connections.pdf Data Center    Network Security Remote Control
Software Policy    The purpose of this policy is to document the reason why the
Remote Control Software shall not be used in the Health Net, Inc. network
without Corporate Information Security approval    Remote Control    ISS   
eNS2001POL - Network Security Remote Control Software.pdf Data Center    Network
Security Approved Remote Control Software Usage    The purpose of this document
is to provide a list of remote control software that has been approved by Client
technology Services.    Remote Control    ISS    eNS2001PRa - Network Security
Approved Remote Control Software Usage.pdf Data Center    Network Security
Remote Control Software on Workstations    The purpose of this document is to
describe the process for obtaining approval for remote control software on a
user workstation when deemed necessary for business needs.    Remote Control   
ISS    eNS2001PRb - Network Security Remote Control Software on Workstations.pdf
Data Center    Network Security Secure RIB Configuration Procedure    The
purpose of this document is to explain the security features that must be
implemented for RIB access.    Remote Control    ISS    eNS2001PRc - Network
Security Secure RIB Configuration.pdf Data Center    Network Security Requesting
a New SSL Certificate Procedure    The purpose of this document is to explain
the procedure for processing NEW (not pre-existing renewals) for SSL Certificate
requests.    SSL Certificates    ISS    eNS2003PRa - Network Security Requesting
a New SSL Certificate.pdf Data Center    Index of ISS Documents    A complete
listing of all ISS Policy & Procedures documents    Cross-functional    ISS   
Index of ISS Documents.xls

 

Schedule O    O - 4    Health Net / IBM Confidential

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Final Execution Version

 

Tower

  

Policy Name

  

Description

  

Category

  

Folder

  

Filename

Data Center    Network Security Accessing the WIDS Console    This document will
outline the process by which an authorized associate would obtain and install
the console software required to access the AirMagnet Enterprise solution   
Wireless    ISS    AccessingWIDSconsole-DRAFT.pdf Data Center    Network
Security Wireless IDS Sensor Deployment    Selected locations, including all new
sites and technology refreshes will be required to include the deployment of
wireless IDS Sensors. This document will outline the appropriate process by
which AirMagnet wireless IDS sensors should be deployed.    Wireless    ISS   
AirMagnetSensorDeployment-DRAFT.pdf Data Center    Network Security Use of SNMP
Policy    This policy applies to enabling SNMPv1, SNMPv2 or SNMPv3 on network
attached devices    SNMP    ISS    eNS7001POL - Network Security Use of SNMP
Policy.pdf Data Center    Network Security Network Traffic Monitoring Policy   
The purpose of this document is to explain the policy of Network Traffic
Monitoring by the Network Infrastructure and Security Services (NISS) team.   
Monitoring    ISS    eNS7002POL - Network Security Network Traffic
Monitoring.pdf Data Center    Network Security Port Scanning Policy    The
purpose of this document is to explain the policy of multiple IP address scans.
   Scanning    ISS    eNS7003POL - Network Security Port Scanning.pdf Data
Center    Network Security Port Scanning Request Procedure    The purpose of
this document is to explain the procedure for processing a Port Scan Request
with the Network Infrastructure Security Services (NISS) team.    Scanning   
ISS    eNS7003PRa - Network Security Port Scanning Request.pdf Data Center   
Network Security Use of ICMP Policy    The purpose of this document is to
explain the use of ICMP.    ICMP    ISS    eNS7004POL - Network Security Use of
ICMP.pdf Data Center    Network Security Analog Phone Line Audit    In an effort
to address an industry recognized network security threat from the inappropriate
use of modem devices attached to corporate analog phone lines, NISS has deployed
the PhoneSweep wardialer solution with 4 specialized modems to audit and report
on the use of all known (Telecom provided) analog 1MB and DID phone lines.   
Scanning    ISS    iNS7005PRa Basic Phonesweep Wardialer Usage.pdf Data Center
   Network Security Foreign Computers on HNI Core Network    The purpose of this
document is to explain the corporate policy when foreign computers and or
contractors are connecting to the Health Net, Inc. network    Foreign Computers
   ISS    eNS1002POL - Network Security Foreign Computers on HNI Core
Network.pdf

 

Schedule O    O - 5    Health Net / IBM Confidential

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Final Execution Version

 

Tower

  

Policy Name

  

Description

  

Category

  

Folder

  

Filename

Data Center    Network Security - Use of Additional Communications Interfaces by
Network Attached Devices Policy    This policy prohibits any device connected to
the Health Net network from having more than one communication interface enabled
at any given time. The purpose of this policy is to provide a standard for
Health Net regarding communication interfaces       ISS    eNS1010POL - Network
Security Use of Additional Communications Interfaces. PDF Data Center    Network
Security Enterprise Routing Policy    The purpose of this document is to
describe the criteria for acceptable network traffic routing within the Health
Net, Inc. Network.       ISS    eNS1021POL - Network Security Enterprise
Routing. PDF Data Center    Network Security Wireless Networking    The purpose
of this document is to explain the corporate policy for wireless access to
Health Net, Inc. networks, hosts, and services       ISS    eNS1022POL - Network
Security Wireless Networking. PDF Data Center    Network Security Internet
Content Filtering    The purpose of this policy is to Provide defined use for
content filtering within Health Net, Identify the oversight and administrative
roles involved with content filtering operations, Provide the criteria for
authorizing a request for a reporting of an associate’s Internet usage, Provide
guidance on how to make changes to Internet content filtering.    Content
Filtering    ISS    eNS1023POL - Network Security Internet Content Filtering.
PDF Data Center    Network Security Management Monitoring of Associate Internet
Usage    The purpose of this policy is to provide definition for content
filtering reporting within Health Net.    Content Filtering    ISS    eNS1024POL
- Network Security Management Monitoring of Associate Internet Usage.pdf Data
Center    Remote Access Services Policy    This policy is being written to
summarize all activities and support criteria associated with existing Dial
Network and VPN Network policies and processes. There are several
process/procedure documents and rules of thumb that have existed for Health Net
for many years - but are now quite outdated and are to be superseded by this
policy    Remote Access    ISS    eNS1025POL - Network Security RAX Services
Policy.pdf Data Center    Network Security SSL Certificate Policy    The purpose
of this document is to explain the policy that will be used by the Network
Infrastructure Security Service team (NISS) to generate, order, and track new
Secure Sockets Layer - SSL Certificate    SSL Certificates    ISS    eNS2003POL
- Network Security SSL Certificate.pdf Data Center    Network Security
Categories of Managed Network Devices    The purpose of this document is to
provide a corporate definition for Health Net network attached end-user hosts,
including workstations and laptops. The document will also provide guidance on
how each category of host shall be supported       ISS    eNS2004POL - Network
Security Categories of Managed Network Devices.pdf

 

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Data Center    Network Security Encryption Standards Policy    The purpose of
this document is to explain the Health Net encryption policy when transmitting
Electronic Protected Health Information (EPHI) data over Internet or Dial-up
lines       ISS    eNS4001POL - Network Security Minimum Encryption
Standards.pdf Data Center    Network Security Network Assessment Scanning    The
purpose of this policy is to provide explicit permission and restrictions
regarding network security scanning performed by the approved internal auditing
entities within Health Net       ISS    eNS7005 - Network Security Network
Assessment Scanning.pdf Data Center    Network Security Small Site    The
purpose of this document is to explain the Health Net Inc. policy of Small Site
Security       ISS    iNS1017POL - Network Security Small Site Security.pdf Data
Center    Network Security Internet Only VLAN Implementation Policy    The
purpose of this policy is to establish parameters in permitting temporary access
for contractors and vendors to access Health Net, Inc. provided resources.      
ISS    iNS1019POL - Network Security Internet Only VLAN Implementation.pdf Data
Center    Network Security Remote Access Security    The purpose of this
document is to explain the attributes of perimeter access control devices.      
ISS    NS1008POL - Network Security Remote Access Security.pdf Data Center   
Network Security Foreign Computers on HNI Network    The purpose of this
document is to explain the procedure for processing an exception to policy
eNS1002POL.    Procedures    ISS    eNS1002PRa - Network Security Foreign
Computers on HNI Network.pdf Data Center    Network Security Partner Connections
   The purpose of this policy is to set a standard for all partner connections
to meet all corporate and regulatory security standards       ISS    eNS1005POL
- Network Security Partners Connection Policy.pdf Data Center    Network
Security Partner Audits    Vendors and/or contractors requiring remote access
are deemed Partner Connections. Remote access includes, but may not be limited
too, dedicated connections (e.g. Site –VPN, Site-Citrix, Frame-Relay, etc),
Internet client connections (e.g. Client –VPN, Client-Citrix) and dial-up. Each
Partner Connection must have an associated Partner Connection Form. This form is
reviewed annually    Procedures    ISS    eNS1005PRb - Network Security Partners
Connection Audit.pdf Data Center    Network Security Third Party Remote Control
of Systems    The purpose of this document is to explain the procedure for
requesting remote control access for Partner Connections.    Procedures    ISS
   eNS1005PRc - Network Security Partners Connection Remote Control.pdf Data
Center    Network Security Vendor Modem Security Checklist    Following is a
checklist to assist teams in gathering the required information for requesting a
Third Party Vendor connection.    Procedures    ISS    eNS1005PRd - Network
Security Partners Connection Modem Checklist.pdf

 

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Data Center    Network Security Perimeter Access Control Policy    The purpose
of this document is to explain the attributes of perimeter access control
devices       ISS    eNS1018POL Network Security Firewall Policy.pdf Data Center
   Network Security Firewall Access Requests    “Separation of Duties” requires
a Network Security Auditor to examine and scrutinize requests for network
traffic flow and IP device access to other environments. The audit process for
analyzing access on the corporate firewalls is provided in this procedure   
Procedures    ISS    eNS1018PRa Firewall Access Requests.pdf Data Center   
Request a Basic Internet Only VLAN Procedure    This document outlines the
procedure for requesting access to the Basic Internet only-VLAN, and the
services available.    Procedures    ISS    eNS1019PRb - Network Security
Request a Basic Internet Only VLAN.pdf Data Center    Network Security Wireless
Access Procedure    The purpose of this document is to describe the specifics
for connectivity to the wireless LAN at some Health Net, Inc. facilities by
contractors, vendors, non-HNI associates as well as HNI associates.   
Procedures    ISS    eNS1022PRa - Network Security Wireless Access.pdf Data
Center    Network Security Extranet VPN Security Policy    The purpose of this
document is to explain the policy for securing Extranet VPN connections      
ISS    iNS1009POL - Network Security Extranet Security VPN Security.pdf Data
Center    Network Security Modem Request Procedure    The purpose of this
document is to explain the procedure for requesting an outside connectivity
device.    Procedures    ISS    iNS1010PRa - Network Security Modem Request.pdf
Data Center    Network Security Analog Line Audit Procedure    This document
will outline the process by which Health Net analog phone lines will be audited
and reported.    Procedures    ISS    iNS1010PRb - Network Security Analog Line
Audit.pdf Data Center    Network Security Perimeter Security Scan Scheduling   
The purpose of this document is to explain three basic types of Perimeter
Security scans and when they are scheduled to be run.    Procedures    ISS   
iNS1013PRa - Network Security Perimeter Security Scan Scheduling.pdf Data Center
   Network Security Internet Site Access Policy    The purpose of this document
is to explain the policy that Health Net, Inc. associates must follow when
accessing all electronic transmissions.       ISS    iNS1014POL - Network
Security Internet Site Access.pdf Data Center    Network Security Restricted
Internet Site Access Procedure    The purpose of this document is to create a
process when associates are accessing the Internet or any electronic
transmissions and are requesting access to a blocked location.    Procedures   
ISS    iNS1014PRa - Network Security Restricted Internet Site Access.pdf Data
Center    Network Security Unrestricted Internet Site Access Procedure    The
purpose of this document is to explain the procedure for requesting unrestricted
internet access.    Procedures    ISS    iNS1014PRb - Network Security
Unrestricted Internet Site Access.pdf Data Center    Network Security Third
Party Vendor Access Policy    The purpose of this document is to provide a
corporate policy of Third Party Vendor access to the Health Net Inc. Network.   
   ISS    iNS1016POL - Network Security Third Party Vendor Access.pdf

 

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Data Center    Network Security Basic Internet Only VLAN Procedure    The
purpose of this document is to explain the procedure for configuring a network
connection to support foreign computers.    Procedures    ISS    iNS1019PRa -
Network Security Basic Internet Only VLAN.pdf Data Center    Network Security
Support of Non-Policy IP Connections Procedure    This document defines the
options for supporting a partner connection that does not meet Health Net’s
minimum standard for fully supported partner connections as defined in Health
Net Policy eNS1020POL - Partner IP Addressing    Procedures    ISS    iNS1020PRa
- Network Security Support of Non-Policy IP Connections.pdf Data Center   
Network Security Remote Access Malicious Activity Response Procedure    The
purpose of this document is to explain the procedure for addressing malicious
activity from a device connected through remote access    Procedures    ISS   
NS1008PRa - Network Security Remote Access Malicious Activity Response.pdf Data
Center    Network Security Policy Development    The purpose of this policy is
intended to provide the Network Infrastructure and Security Services (NISS) team
guidelines when creating Corporate Policies and Procedures    Policies    ISS   
eNS0001POL - Network Security Policy Development.pdf Data Center    Network
Security Procedure Approval Procedure    The purpose of this procedure is to
describe the process by which the Network Infrastructure Security Services
(NISS) team will follow in having procedures and/or policies approved and
implemented.    Procedures    ISS    eNS0001PRa - Network Security Policy
Approval Procedure.pdf Data Center    Network Security Policy Numbering System
   The purpose of this document is to describe the method by which NISS
Policies, Procedures, Risk Assessment, Standards and Guidelines are documented
and cataloged for reference, storage and retrieval purposes in the Domino Doc
Lotus Notes Database.       ISS    eNS0001PRb - Network Security Policy
Numbering System.pdf Data Center    Network Security Policy Approval    The
purpose of this procedure is to describe the processes the Network
Infrastructure Security Services (NISS) team will follow in having policies
approved and implemented.       ISS    eNS0001PRg - Network Security Policy
Approval Procedure.pdf Data Center    Network Security HNI Security Environments
Policy    The purpose of this document is to define the policy for the Network
Infrastructure Security Services (NISS) team when conducting testing of any new
products and/or services before implementation into production environments   
   ISS    eNS0002POL - Network Security HNI Security Environments.pdf

 

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Data Center    Network Security Corporate Change v    The purpose of this
document is to define the policies the ITG Network Infrastructure Security
Services (NISS) team is to follow in regards to effecting changes in the Health
Net Enterprise Network. These processes are located in the HNI Corporate Change
Management Request policy. (Located in section “IV. Related Policies”).      
ISS    eNS0003POL - Network Security Change Control Policy.pdf Data Center   
Network Security Change Management Request Procedure    The purpose of this
document is to explain the procedure that the NISS team will follow when
creating a routine Change Management Request (CMR).    Procedures    ISS   
eNS0003PRa - Network Security Notification Only CMR.pdf Data Center    Network
Security CMR Meetings Agenda Procedure    Describes the tasks that contribute to
a successful CMR meeting.       ISS    eNS0003PRd - Network Security CMR
Meetings Agenda.pdf Data Center    Network Security Spoofed Email Notification
Policy    The purpose of this document is to explain that NISS shall respond to
reports of spoofed email       ISS    eNS0004POL - Network Security Spoofed
Email Notification.pdf Data Center    Network Security Response to Spoofed Email
Notification Procedure    The purpose of this document is to explain how NISS
shall respond to reports of spoofed email       ISS    eNS0004PRa - Network
Security Response to Spoofed Email Notification.pdf Data Center    Network
Security Logging Policy    The purpose of this document is to describe the
importance regarding logging capabilities that must be enabled on equipment that
collects and maintains system and user events       ISS    eNS0005POL - Network
Security Logging Policy.pdf Data Center    Network Security Password Maintenance
Policy    The purpose of this document is to explain the corporate password
policy for Network Infrastructure Security Services (NISS).       ISS   
eNS0006POL - Network Security Password Maintenance Policy.pdf Data Center   
Network Security Administrative Password Procedure    The purpose of this
document is to explain administrative password changes by Network Infrastructure
Security Services (NISS) associates    Procedures    ISS    eNS0006PRa - Network
Security Administrative Passwords.pdf Data Center    Network Security Emailing
New Administrative Password Procedure    The purpose of this document is to
describe how to send the Enable Password Change email    Procedures    ISS   
eNS0006PRb - Network Security Emailing New Admin Password.pdf Data Center   
Network Security Changing Cisco Passwords Procedure    The purpose of this
document is to explain the process for changing Cisco passwords    Procedures   
ISS    eNS0006PRc - Network Security Changing Cisco Passwords.pdf

 

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Data Center    Network Security Document Creation Procedure    The purpose of
this document is to explain in detail the procedure that the NISS Personnel must
follow when creating and storing documents, particularly Policies, Procedures,
Guidelines and Risk Assessments. This procedure does not address Standards, as
those documents are the responsibility of INFOSEC.    Procedures    ISS   
iNS0001PRc - Network Security Document Creation.pdf Data Center    Network
Security Document Revision Procedure    The purpose of this document is to
define Minor and Material Document revisions and to explain the procedure for
updating a document after a revision. This procedure will specifically apply to
Network Security Policies, Procedures, Guidelines and Risk Assessments.      
ISS    iNS0001PRd - Network Security Document Revision.pdf Data Center   
Network Security Domino Document Manager Storage and Revision Procedure    The
purpose of this document is to explain in detail the procedure to add documents
and revise existing documents in Domino Document Manager (DomDoc); this would
include Policies, Procedures, Guidelines and Risk Assessments.       ISS   
iNS0001PRe - Network Security Domino Document Manager Storage and Revion.pdf
Data Center    Network Security Firewall Change Requests    Describe the details
involved in making a request to modify a firewall rule base    Procedures    ISS
   iNS0003PRe - Network Security Firewall Change Request.pdf Data Center   
Network Security Firewall Audit    Describe the details involved in extracting
open IP/port information from the Health Net Cisco PIX firewalls. The
information is then compared and cross-referenced to existing audit documents
for purposes of updates and maintenance    Procedures    ISS    iNS0003PRf -
Network Security Firewall Audit.pdf Data Center    Network Security Altiris
Weekly Summary Report Policy    The purpose of the Altiris report is to document
and track the number of unaccounted workstations for Health Net, Inc.       ISS
   iNS0008POL - Network Security Altiris Weekly Summary Report Policy.pdf Data
Center    Network Security Altiris Weekly Summary Report Procedure    The
purpose of this procedure is to describe the process by which the Network
Infrastructure Security Services (NISS) team will follow in updating and running
the Weekly Altiris Summary Report.    Procedures    ISS    iNS0008PRa - Network
Security Altiris Weekly Summary Report Procedure.pdf Help Desk    Convergence
Phone Updating Your Personal Greeting    Voicemail greetings procedures   
Procedures    Help Desk    Convergence Phone Personal Greeting Update
Procedure.doc

 

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Help Desk    Help Desk Password Reset Verification    The purpose of the Policy
is to support compliance with Information Security regulations. Associates
contacting the Help Desk requesting a password reset for ANY application, will
be required to verify their identity including providing the last four digits of
their Social Security number.    Password    Help Desk    Password reset
verifications policy.doc Help Desk    Privacy and Security Awareness Week Script
Policy    The purpose to this policy is to outline why a Help Desk agent must
input a special phone script on their personal greeting to greet a client via
the Rockwell Convergence IVR during, Privacy and Security Awareness Week.      
Help Desk    Privacy and Security Awareness Week Policy.doc Help Desk    Privacy
and Security Awareness Week Scripts    This purpose to this procedure is to
outline the scripts the Help Desk will use to greet a client via the Rockwell
Convergence IVR during, Privacy and Security Awareness Week    Procedures   
Help Desk    Privacy and Security Awareness Week Procedure.doc Help Desk   
Novell Directory Services (NDS) and NT Domain Administration Guideline and
Procedure    This guideline is intended to prevent abuse of administrative
capabilities on NT and NetWare file servers and their associated directories
(NDS, AD, LDAP). The assignment of NDS and NT Domain Access administrative
rights is contingent upon acceptance of these terms, as represented by signature
of this document       Help Desk    SS NDS-NT security guideline rev6.doc Help
Desk    Visitor Confidentiality Notification    Copy of notice to visitors to a
Health Net secure facility    Site Visitors    Help Desk    Visitor
Confidentiality Notification (Final).doc Data Center    Client Technology
Services Directory    List of all services provided by Client Technology
Services    CTS Services    CTS    Client Technology Services Summary.xls Data
Center    Example Intrust & NetVision alerts    Samples of alerts    Alerts   
CTS    Example Alert Data.doc Data Center    Security Logging - Alerts and
Reports    The purpose of this document is to provide a list of Alerts and
Reports CTS generates from the security log data collected by the NetVision and
Quest InTrust systems    Alerts    CTS    Security Logging - Alerts and
Reports.pdf Data Center    Security Logging Detailed Design    This document
will provide a detailed architectural design of the Security logging that has
been implemented on Client Technology Services (CTS) supported Microsoft Windows
and Novell NetWare servers.    Security Logging    CTS    Security Logging -
Detailed Design v1.5.pdf

 

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Data Center    Security Administration Procedures for Microsoft Active Directory
   Security responsibilities are conducted for the following Microsoft Active
Directory Forest HEALTHNET.COM (Including Domains HNCORP, FS, and RMT) for
Health Net, Inc.:    MS Active Directory    CTS    Security_Administration_
Procedures_AD.doc Data Center    Security Administration Procedures for Novell
eDirectory    The above responsibilities are conducted for the following Novell
eDirectory Trees Meta and FHC for Health Net, Inc.:    Novell eDirectory    CTS
   Security_Administration_
Procedures_eDir.doc Cross-Functional    #Index.xls    Index of files for DIACAP
   DIACAP Index    DIACAP    #Index.xls Cross-Functional    Attachment C for
HNFS TRICARE Contract    1.0 GENERAL. Section C includes two categories of
outcome based statements: Objectives and Technical Requirements. The
“Objectives” represent the outcomes for this contract and are supported by
technical requirements. These requirements represent specific tasks, outcomes,
and/or standards that, at a minimum, shall be achieved. The purpose of this
contract is to provide Managed Care Support (MCS) to the Department of Defense
(DoD) TRICARE program. The MCS Contractor shall assist the Military Health
System in operating an integrated health care delivery system combining
resources of the military’s direct medical care system and the Contractor’s
managed care support to provide health, medical and administrative support
services to eligible beneficiaries    DIACAP Requirements    DIACAP   
00_ATTACHMENT_C.pdf Cross-Functional    TRICARE Systems Manual 7950.2-M,
February 1, 2008, General Automated Data Processing (ADP) Requirements    The
TRICARE Systems Manual (TSM) describes how TRICARE business functions are
implemented technically via system-to-system interactions and government
provided applications. The TSM also describes the technical concept of
operations, including the responsibilities associated with various information
systems including Defense Enrollment Security Administration Procedures for
Novell eDirectory Eligibility Reporting System (DEERS), the contractor systems,
and selected Direct Care (DC) information systems.    DIACAP Requirements   
DIACAP    C19S3.pdf

 

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Cross-Functional    TRICARE Operations Manual 6010.56-M, February 1, 2008,
Health Insurance Portability and Accountability Act (HIPAA) of 1996    The
contractor shall comply with the provisions of the Health Insurance Portability
and Accountability Act (HIPAA) of 1996 Privacy and Security Rules (45 CFR Parts
160, 162, and 164).    HIPAA Requirements    DIACAP    C1S1_1.pdf
Cross-Functional    Health Net Government & Specialty Services Security and
Privacy Policies, Procedures, Standards, and Guidelines    All of the following
documents and Web sites are available online, and specify our security policies,
procedures, and requirements that must be incorporated within the Health Net /
IBM contract.    DIACAP Policies Listing    DIACAP    DIACAP Policies and
Standards.doc Cross-Functional    DoD Background Check Requirement Map    User
Access guide to HNFS systems    User Access    DIACAP    DoD Background Check
Requirement Map.xls Cross-Functional    Internal Audit Requirements    The
Health Net Internal Audit Department requires access to data center locations
(where the audit scope requires) to conduct their audits. A link to their
charter is below, explaining these audit activities (Internal Health Net Link).
   Audits    DIACAP    Internal Audit Requirements.doc Cross-Functional    MHS
Physical Security Assessment Matrix    MHS Physical Security Assessment Matrix
   Physical Security    DIACAP    Physical Security Requirements.xls
Cross-Functional    ITG Protecting Health Information    The purpose of this
document is to provide guidance to all Information Technology Group (ITG)
associates for protecting PHI in the course of completing their job duties and
responsibilities    PHI    Logistics    HIPAA_Procedures.doc Cross-Functional   
Corporate Information Security Standards & Guidelines    This document contains
the corporate information security standards and guidelines for Health Net, Inc.
and its subsidiaries and affiliates (the “Company”). These standards and
guidelines are intended to provide guidance to all Company users for protecting
Company information in carrying out their job responsibilities. In addition,
these standards and guidelines help ensure Company personnel meet applicable
laws and regulations regarding security and privacy of information protection
including the Health Insurance Portability and Accountability Act of 1996
(HIPAA).    Information Security    InfoSec   
Information_Security_Standards.pdf Cross-Functional    ARISC Form    Use this
form to document acknowledgment of temporary noncompliance with a security
control standard or of noncompliance on a permanent basis (reviewed annually).
   Security Control Waiver    InfoSec    ARISC Form.doc

 

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Cross-Functional    Business Unit Security Review Program    Business Units have
a duty to protect information assets from a variety of threats such as service
interruption, error, fraud, embezzlement, sabotage, terrorism, extortion,
industrial espionage, privacy violation and natural disaster       InfoSec   
HNI Business Unit Security Review Program.doc Cross-Functional    Business Unit
Security Review Questionnaire    The Business Unit Security Review Questionnaire
is intended to provide a process to meet the due diligence of evaluating a
Health Net company entity’s (i.e., Business unit) information security
compliance with the Health Net Inc’s corporate programs, policies, standards and
appropriate state and federal security regulations or published security
criteria.       InfoSec    HNI Business Unit Security Review Questionnaire.doc
Cross-Functional    Service Provider Security Assessment Questionnaire    The
Service Provider Security Assessment Questionnaire is intended to provide a
process to meet the due diligence of evaluating a non-company entity’s (i.e.,
service provider) information security compliance with the Health Net Inc’s
corporate programs, policies, standards and appropriate state and federal
security regulations or published security criteria       InfoSec    HNI
Security Assessment Questionnaire.doc Cross-Functional    HN Incident Report
Form    Security breach incident report form       InfoSec    Incident Report
Form.doc Cross-Functional    Information Security Policy    All information used
in the course of business is considered a Company asset. Toward this end,
management and Users are responsible and accountable for its protection.      
InfoSec    Information Security Policy.pdf Cross-Functional    Acknowledgment of
Reduced Information Security Control (A-RISC) Form Instructions    Due to unique
or special business circumstances, a department may not be able to comply with a
particular aspect of a Corporate Information Security policy or standard.   
Security Control Waiver    InfoSec    INFOSEC A-RISC
Instructions.ver1.0.928905.final.doc Cross-Functional    Security
Self-Assessment Questionnaire Instructions    Security Self-Assessment
Questionnaire Instructions. The Security Self-Assessment Questionnaire
(“Questionnaire”) review is intended to help departments determine how well
their security systems are in compliance with Company security policies and
standards       InfoSec    Security Self-Assessment Questionnaire
Instructions.pdf Cross-Functional    Security Self-Assessment Questionnaire   
Security Self-Assessment Questionnaire.       InfoSec    Security
Self-Assessment Questionnaire.xls

 

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Cross-Functional    Security Administration Procedures Template Instructions   
All security systems at Health Net, including physical security, network,
operating system, application, and databases, need to have documented procedures
that are used to administer their security    System Security    InfoSec   

Security_Administration_Procedures

_Template_Instructions.pdf

Cross-Functional    Security Administration Procedures Template    Security
Administration Procedures template    System Security    InfoSec   

Security_Administration_Procedures

_Template.doc

Cross-Functional    Security and Privacy Incident Response Plan    This document
will provide the details of the Security and Privacy Incident Response Plan
including the typical events that would invoke it and the definition of the
roles and responsibilities of the Incident Response Management Team that will
support it.    Incident Response    InfoSec    Security_and_Privacy_Incident_
Response_ Plan (September 2007 - website edition).doc Cross-Functional    Vendor
Product Security Assessment    As part of the process in evaluating vendor
products with security functions, Health Net Inc. (HNI) requires potential
vendors to elaborate on the security functions and controls that the product has
in place to meet company information security standards. The answers to this
assessment will be used by Health Net Inc. to gain an insight into the overall
security capabilities of a potential vendor product    Vendor Products Security
   InfoSec    Vendor Product Security Assessment.doc Data Center    ABS PROD -
DAccount Violation Policy    D Account Violation Policy    ABS    DCS    ABS D
Account Violation Policy - Procedure.doc Data Center    Alternate Approval List
for Power and D Accounts    Alt Approver roster for Power and D Accounts    ABS
   DCS    Alternate Approval List for Power and D Accounts.xls Data Center   
CICS TS Newcopy Procedures    This document describes how to do a CICS Newcopy
and validate the Newcopy worked.    CICS    DCS    CICS TS Newcopy
Procedures.doc Data Center    Data Center Access Log Sheet    Data Center Access
Log Sheet (Form)    Data Center    DCS    Data Center Access Log Sheet_
2-3-08.xls Data Center    Procedure to gain access to the Data Center Raised
Floor Area    Procedure for vendor access to the Data Center Raised Floor Area
   Data Center    DCS    Data Center Vendor Access for Support Groups1.doc Data
Center    How to Review Robot Products Security    AS400    Mainframe    DCS   
How to review Robot Products Security.doc Data Center    SCLM Code Moves   
Program Code Moves via SCLM utility    ZOS/390    DCS    IBM - SCLM Moves.doc
Data Center    MC400 Power Account Policy    Power Acct Enable/Disable guideline
and SLA    AS400    DCS    MC400 Power Account Policy - Procedure.doc Data
Center    Programming Code Migration for MC400/HNNE    MC400 Code Migration -
MKS    MC400    DCS    MKS Proccedure.doc Data Center    MKS Rollback Procedure
   MC400 Code Migration - MKS    MC400    DCS    MKS Rollback.doc

 

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Data Center    Operations procedure for Data Center Vendor Access    Provides
direction for Operations when Vendor access to the Data Center is requested.   
Data Center    DCS    Operations Actions For Vendor Access.doc Data Center   
Code Move Access Audit - Quarterly    Quarterly audit of Computer Operations and
Production Control access to move program code into Production.    Production
Control    DCS    Pgm Code Move Access Audit.doc Data Center    Offsite & Onsite
Tape Management    Tape handling procedures for all host platforms    Production
Control    DCS    POLICY OFFSITE AND ONSITE TAPE MANAGEMENT.doc Data Center   
PRELUDE AS400 Procedure for enabling/disabling Power Accounts    Power Acct
Enable/Disable - Prelude    AS400    DCS    Power account Procedure for
PRELUDE.doc Data Center    SYMPHONY AS400 Procedure for enabling/disabling Power
Accounts    Power Acct Enable/Disable - Symphony    AS400    DCS    Power
account Procedure for SYMPHONY.doc Data Center    HNNE AS400 Procedure for
enabling/disabling Power Accounts    Power Account Enable/Disable - MC400.   
AS400    DCS    Procedures to enable-disable power accouts.doc Data Center   
Gold Pointe building “A” temporary and contractor badge issuance    This
procedure will provide direction for security personnel when issuing access
badges for the Health Net, Inc. data center Gold Pointe building “A” located at
12033 Foundation Place, Hazel Data Center (HDC). Only HDC is covered by this
procedure.    Data Center    DCS    Revised Desk officer policy 10-31-07.doc
Data Center    SCLM Package Backout Process    SCLM Move Backout - explains the
new function in SCLM    ZOS/390    DCS    SCLM Package Backout facility.doc Data
Center    SCLM Package Restore Procedure    SCLM Move Backout - is the
procedures on backing out a package.    ZOS/390    DCS    SCLM Package Restore
Procedure.doc Data Center    Offsite & Onsite Tape Management    Vendor Dial-in
Access    All Platforms    DCS    Vendor Access - Procedure.doc Data Center   
Vendor CEs Roster    Roster of vendor contacts that have frequent access to Data
Center Host systems.    Data Center    DCS    Vendor CEs - Resident021908.xls
Data Center    VMS BACKOUT MOVES ON ALPHA CLUSTER Procedures    ABS Move Backout
   ABS    DCS    VMS BACKOUT MOVES ON APLHA CLUSTER.doc Data Center    VMS PRD
VMS MOVES ON ALPHA CLUSTER    ABS Moves    ABS    DCS    VMS PRD VMS MOVES ON
APLHA CLUSTER.doc Data Center    Plan to Ensure Continued Preservation of
Electronically Stored Information (ESI)    Presentation on the need to maintain
auditable records regarding Electronically Stored Information (ESI)    ESI   
DCS SWS    Health Net ESI Preservation Roadshow - Privileged and Confidential -
rev05.ppt Data Center    ITLS Process Manual For Associate Document Requests   
Process Manual For Associate Document Requests    General    DCS SWS    ITLS
Process Manual.doc Data Center    Intent to Archive Data System    Intent to
Archive Data System form    Storage    DCS SWS    Sample Archive
Documentation.doc Data Center    Intent to Decommission or Transfer System   
Intent to Decommission or Transfer System form    Storage    DCS SWS    Sample
Decommission

 

Schedule O    O - 17    Health Net / IBM Confidential

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Final Execution Version

 

Tower

  

Policy Name

  

Description

  

Category

  

Folder

  

Filename

               Transfer Documentation.doc Cross-Functional    CODE OF BUSINESS
CONDUCT AND ETHICS    Corporate Code of Business Conduct and Ethics    General
   Privacy    business_conduct_code.pdf Cross-Functional    Notification of
Access    Procedures for notification to requesters of accounts for new users
and notification of modifications and additional system access for current
users.    Access Admin    Access Admin    Access Administration Notification
Policy 3-14-07.doc Cross-Functional    Rules of Engagement    Policy stating the
conditions under which the Access Administration (“AA”) Team will agree to
perform the duties of Access Administration (account adds, modifies, & deletes),
Periodic Review, and Supervision of Account Inactivity for a system/application.
   Access Admin    Access Admin    Access Administration Project Implementation
Rules.doc Cross-Functional    Roles & Responsibilities    Policy stating the
roles & responsibilities of the Access Administration Team, and the expected
responsibilities of other teams with which they work.    Access Admin    Access
Admin    Access Administration Roles & Responsibilities.doc Cross-Functional   
Security Roles & Responsibilities    Definition of the roles and
responsibilities of a security administrator, security SME, and of the Access
Admin team.    Access Admin    Access Admin    Access Administration Security
Roles & Responsibilities.doc Cross-Functional    Naming Standard – All New
Accounts    Health Net naming standard for all new user id accounts    Access
Admin    Access Admin    Company Naming Standard 10-4-05.doc Cross-Functional   
Contractor/Temporary Employee Policy    Access Admin policies and procedures
pertaining to contract and temp employees.    Access Admin    Access Admin   
Contractor - Temp Employee Policy.doc Cross-Functional   
Inactive/Disable/Delete Policy    P&P pertaining to inactive and disabled user
accounts    Access Admin    Access Admin    Disable and Delete
Policy 6-26-07.doc Cross-Functional    Novell eDirectory & Microsoft Active
Directory Security Policy    Agreement form relating to various policies and
procedures surrounding Novell eDirectory and Microsoft Active Directory security
   CTS    Access Admin    eDIR - AD Security Policy v14b.pdf Cross-Functional   
Executive Account Deletions    P&P relating to the deletion of userid accounts
held by executive officers, such a CXO and SVPs.    Access Admin    Access Admin
   Executive Accounts - Deletion 3-14-05.doc Cross-Functional    Emergency
Access Procedures    To provide a quick means for a person, such as an
associate, , a vendor, or a contractor, to gain access to Health Net information
and systems during an interruption of normal connectivity, when necessary to
maintain Health Net business.    Access Admin    Access Admin    HNFS Emergency
Access Procedures 6-1-04.doc Cross-Functional    Disabled Account Policy   
Older version of Disable and Delete Policy 6-26-07.doc above (This document
should be deleted.)    Access Admin    Access Admin    Inactive Account Policy
4-17-07.doc Cross-Functional    MC400 Power Accounts    (Duplicate of document
above. This document should be deleted.)    Access Admin    Access Admin   
MC400 Power Account Policy - Procedure.doc

 

Schedule O    O - 18    Health Net / IBM Confidential

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Tower

  

Policy Name

  

Description

  

Category

  

Folder

  

Filename

Cross-Functional    Notification of Account Ids and Passwords    Older version
of Access Administration Notification Policy 3-14-07.doc above. (This document
should be deleted.)    Access Admin    Access Admin    Notification of Account
IDs and Passwords Procedure.doc Cross-Functional    Novell eDirectory &
Microsoft Active Directory Security Policy    (Duplicate of eDIR - AD Security
Policy v14b.pdf above. One of these should be deleted.)    Access Admin   
Access Admin    NT- HIPAA Domain Account Policy 2-25-03.pdf Cross-Functional   
OS390 Termination Policy    The purpose of this document is to describe the
process to terminate/remove a RACF account from the IBM OS390 system when the
associate/contractor has been terminated or inactive for greater than 60 days.
   Access Admin    Access Admin    OS390 RACF Termination Policy.doc
Cross-Functional    OS390 Termination Policy    The purpose of this document is
to describe the process to terminate/remove a RACF account from the IBM z-Series
system when the associate/contractor has been terminated or inactive for greater
than 60 days.    Access Admin    Access Admin    OS390 Termination
Policy 7-27-04.doc Cross-Functional    Role-Based Access in the MC400    P&P
relating to the creation and maintenance of roles and the assignment of roles to
users within the MC400 environment    MC400    Access Admin    Role Based Access
MC400 P&P rev.04.28.04.doc Cross-Functional    IS Request Processing – Temp to
Perm    This document will state the policy on submitting an IS Request for the
purpose of converting a temporary employee to a permanent one and vice versa.
The policy aims to reduce the time spent by Access Administration in reviewing
and processing the IS Requests for temp to perm and perm to temp conversion.   
Access Admin    Access Admin    Temp to Perm Policy 3-22-07.doc Cross-Functional
   Associate/Contractor Termination Policy    This document will describe
Associate/Contractor Termination Policy. The termination should be completed on
or as close to the termination date as possible. The goal is to revoke access
from all systems. In certain cases, the associate may need to maintain their
access to the former position for a period of time. It is the responsibility of
the supervisor/manager to notify OE that an associate or contractor will be
terminated.    Access Admin    Access Admin    Termination Policy 20070706.doc
Cross-Functional    Training Accounts    The purpose of this document is to
describe the process to establish and maintain training accounts within the
guidelines of the Information Security Policy    Access Admin    Access Admin   
Training Account Policy.doc

 

Schedule O    O - 19    Health Net / IBM Confidential

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Tower

  

Policy Name

  

Description

  

Category

  

Folder

  

Filename

Cross-Functional    Associate Transfer Process    P&P relating to the transfer
of an associate from one department to another within HN. Includes P&Ps relating
to the temporary “bridging” of an associate’s access across two departmental
boundaries.    Access Admin    Access Admin    Transfer Policy and
Procedure 6-6-07.doc Cross-Functional    Associate Transfer - IS Request
Processing    An older version of the Transfer Policy and Procedure 6-6-07.doc
document listed above. (This document should be deleted.)    Access Admin   
Access Admin    Transfer Policy.doc Cross-Functional    ASSOCIATE GUIDELINES AND
PROCEDURES ACKNOWLEDGMENT FORM    ASSOCIATE GUIDELINES AND PROCEDURES
ACKNOWLEDGMENT FORM    Access Admin    Access Admin    Associate Acknowledgment
Form-hard copy dist. version.doc Cross-Functional    CONFIDENTIALITY STATEMENT -
RESTRICTED GROUP ACCESS EMPLOYEE CLAIM, MEDICAL AUTHORIZATION AND ELIGIBILITY
DATA    CONFIDENTIALITY STATEMENT - RESTRICTED GROUP ACCESS EMPLOYEE CLAIM,
MEDICAL AUTHORIZATION AND ELIGIBILITY DATA    Access Admin    Access Admin   
Confidentiality Agreement.doc Cross-Functional    ASSOCIATE PROPRIETARY PASSWORD
AGREEMENT    ASSOCIATE PROPRIETARY PASSWORD AGREEMENT    Access Admin    Access
Admin    Password Agreement 2.01.doc Cross-Functional    Novell Directory
Services (NDS) and NT Domain Administration Guideline and Procedure    Older
version of the eDIR - AD Security Policy v14b.pdf listed above. (This version
should be deleted.)    Access Admin    Access Admin    SMS NDS-NT Security
Guideline rev13.pdf Data Network    Critical Security Incident Escalation
Process    This purpose of this document is to provide guidelines for the
Network Operations staff to notify Health Net the IT Utility of a critical
security issue.    Security Escalation    NetOps    Critical Security Incident
Escalation Process.doc Data Network    Enterprise Networking Security Document
Index    (Should be deleted).       NetOps    Enterprise Networking Security
Document Index.doc Data Center    System Password Documentation    System
password documentation and update used by Computer Operations and Production
Control    Data Center    DCS    99.Documentation Template.doc Data Center   
ABS PROD - DAccount Policy & (User’s) Procedures    Method and criteria for
enable / disable of D Accounts    Data Center    DCS    Policy and Procedure for
Activating D Accounts.doc

 

Schedule O    O - 20    Health Net / IBM Confidential

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B. OTHER HEALTH NET POLICIES AND PROCEDURES

OTHER HEALTH NET POLICIES

 

Tower

  

Policy Name

  

Description

  

Category

  

Notes

Help Desk    Remedy Incident Priority Category Definitions    Defines Incident
Priority    Incident and Problem Management    Help Desk    Remedy Problem
Priority Category Definitions    Defines Problem Priority    Incident and
Problem Management    Help Desk    Remedy Problem Management Policy and User
Guide    Remedy Problem Management Policy and User Guides.    Problem Management
   Help Desk    Point of Contact Guide    Provides procedure for calls in to the
Help Desk    Help Desk    Cross-Functional    Military Health System (MHS)
Information Assurance (IA) Policy/Guidance Manual          Cross-Functional   
Change Management User Guide    Remedy Change Management User Guide describes
basic Change Management functions.    Change and Release Management   
Cross-Functional    Change Management Policy-       Change and Release
Management    Help Desk    Remedy User Guide       Change and Release Management
   Cross-Functional    Change Management Quick Reference Guide       Change and
Release Management    Cross-Functional    Oracle Naming Standards         
Cross-Functional    Health Net Disaster Recovery Policies and Procedures
Document   
https://hnconnect.healthnet.com/business_units/itg/policies_and_procedures/Disaster_Recovery/
DR_Critical_Applications_Policies__Procedures_Revised_July_2.pdf    IT
Continuity & Disaster Recovery Services    Cross-Functional    Mission Critical
Applications Policies and Procedures       IT Continuity & Disaster Recovery
Services   

 

Schedule O    O - 21    Health Net / IBM Confidential

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Tower

  

Policy Name

  

Description

  

Category

  

Notes

Cross-Functional    DR Account Management Procedure       IT Continuity &
Disaster Recovery Services    Cross-Functional    2007 ITG Disaster Recovery
Program Overview       IT Continuity & Disaster Recovery Services   
Cross-Functional    Disaster Recovery Critical Path       IT Continuity &
Disaster Recovery Services    Cross-Functional    Disaster Recovery Process
Lifecycle       IT Continuity & Disaster Recovery Services    Cross-Functional
   Plan to Ensure Continued Preservation of Electronically Stored Information
(ESI)       Storage Management, Data Retention    Data Center    Internal
Policies for ISeries    Describes the Health Net iSeries Policies      
Cross-Functional    Outage Reporting Procedure    Describes how to report an
outage    Help Desk    Cross-Functional    Tibco Posting Procedures    Details
how to obtain Tibco support from Tibco website       Cross-Functional    Vendor
Technical Support Message Posting Policies    Describes how to post messages
regarding support of Middleware       Data Network    Network Engineering
Charter    Provides functional roles for the Network Design and Engineering and
Network Engineering Architecture and Converged Services   
Engineering/Development    Data Network    Network Facilities design and
engineering charter    Provides descriptions and responsibilities for design and
engineering    Engineering/Development    Data Network    Network Production
Support engineering charter    Provides functional roles for the Network
Production Support Team    Engineering/Development    Cross-Functional    Tape
Management Policy Procedures    Purpose of the document is provide Tape
Management guidelines in order to comply with SOX    Storage Management, Data
Retention    Voice Network    Voice Network Policies and Procedures    Documents
are Corporate Telecom Functional Responsibilities (including Roles and
Responsibilities and the Telecom Services Charter    Voice Network Operations
and Administration   

 

Schedule O    O - 22    Health Net / IBM Confidential

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Tower

  

Policy Name

  

Description

  

Category

  

Notes

Help Desk    Help Desk Internal Policies and Procedures    Service Desk
Procedure database containing all policies and procedures that are used for the
Help Desk    Help Desk General Policies and Procedures    Service Desk Policy &
Procedures Lotus Notes database located on SACDOM50 Cross-Functional   
Facilities Standards & Policies       Environment and Facilities Support   
Network Voice    Telephone Service Request          Data Center    Batch and
Online Processing Policy    Guidelines for Batch and Online process and
monitoring.    General Policies and Procedures for Ops and Prod Cntrl    Batch
and Online Processing Policy - Procedure.doc Data Center    Document and Archive
Retention Policy    Archive and retention policy for Production documents.   
General Policies and Procedures for Ops and Prod Cntrl    Document Archive
Retention Policy - Procedure.doc Data Center    Escalation and Notification
Policy    Policy for escalation and notification of Priority 1 and 2 problems.
   General Policies and Procedures for Ops and Prod Cntrl    Escalation and
Notification Policy Procedure for Problem Pri 1 and 2 Oct 2006.doc Data Center
   Exceptions to Normal Processing Policy    Error handling measures for
exceptions to normal processing.    General Policies and Procedures for Ops and
Prod Cntrl    Exceptions to Normal Processing Policy - Procedure.doc Data Center
   File Transfer Validation Policy    Validation of file transfers / uploads.   
General Policies and Procedures for Ops and Prod Cntrl    File Transfer
Validation Policy - Procedure.doc Data Center    Media Retention Policy and
Procedure    Media retention and definition.    General Policies and Procedures
for Ops and Prod Cntrl    Media Retention Policy - Procedure.doc Data Center   
Monitoring Batch Processing Policy    Monitor of batch process to ensure
completion and accountability of exceptions.    General Policies and Procedures
for Ops and Prod Cntrl    Monitoring Batch Processing Policy - Procedure.doc
Data Center    Output and Report Policy    Guideline for Operations to support
output report issues normally addressed by remote sites.    General Policies and
Procedures for Ops and Prod Cntrl    Output and Report Policy.doc Data Center   
Removable Labeling of Backup Media Policy    Guideline for Operations to ensure
backup output media created outside of tape tracking software is being labeled.
   General Policies and Procedures for Ops and Prod Cntrl    Removable labeling
of backup media Policy - Procedure.doc

 

Schedule O    O - 23    Health Net / IBM Confidential

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Data Center    Scheduling Policy - Procedure    Guideline for setting up
required jobs in automated scheduler.    General Policies and Procedures for Ops
and Prod Cntrl    Scheduling Policy - Procedure.doc Data Center    Spool File
Retention Policy    Guideline to control amount of spool files currently being
generated on system.    General Policies and Procedures for Ops and Prod Cntrl
   Spool File Retention Policy - Procedure.doc Cross Functional    ITG
Technology Plan 2008    Provides the Technical Architecture for Health Net   
Planning and Analysis;    Cross Functional    Preservation of Electronic Data   
Preservation of Electronic Data    Data Retention    Data Center    Cumulative
PTF Application Strategy    PTF Application Strategy       Data Center    AS400
System Software Maintenance Policy    AS400 System Software Maintenance      
Cross Functional    Health Net Associate Policy    Provides the Health Net
policies regarding its associates    Human Resources    Cross Functional   
Health Net Signature Authority Policy    Provides the Health Net rules regarding
Signature Authority    Cross Functional   

 

Schedule O    O - 24    Health Net / IBM Confidential

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SCHEDULE P

APPROVED SUBCONTRACTORS

 

Schedule P    P - 1    Health Net / IBM Confidential

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SCHEDULE P

APPROVED SUBCONTRACTORS

 

1. INTRODUCTION

 

1.1 This Schedule P (Approved Subcontractors) comprises the list of all Approved
Subcontractors as of the Effective Date. Changes to this listing will be made in
accordance with Section 7.7 of the General Terms and Conditions.

 

2. APPROVED SUBCONTRACTORS

 

Subcontractor

  

Scope of Services

AT&T    Provide voice and video conferencing services and LAN/WAN management
Services for Health Net Service Recipients in the United States. Cisco   
Provide voice and/or data maintenance services for Health Net Service Recipients
in the United States. NCR    Provide voice and/or data maintenance services for
Health Net Service Recipients in the United States. Siemens    Provide voice
and/or data maintenance services for Health Net Service Recipients in the United
States. Nortel    Provide voice and/or data maintenance services for Health Net
Service Recipients in the United States.

 

Schedule P    P - 2    Health Net / IBM Confidential

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SCHEDULE Q

PROCEDURES MANUAL

 

Schedule Q    Q - 1    Health Net / IBM Confidential

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1. INTRODUCTION

This Schedule Q (Procedures Manual Table of Contents) describes the general
content and organization of the Procedures Manual that will be developed to
support delivery of the Services to Health Net in accordance with the Agreement,
and may include, (i) procedures used to manage the relationship between Supplier
and Health Net, track and report the financial details related to the Agreement,
report performance results, and other governance related processes that are
expressly defined in the Agreement.

 

2. GENERAL CONTENT AND ORGANIZATION

The table below provides the general organization and content of the Procedures
Manual to be developed by Supplier with reasonable assistance from Health Net.
The Procedures Manual will provide the procedures that will be followed to
provide the Services to Health Net. These procedures assist to identify and
outline the processes followed by Supplier in areas such as communication,
reporting, issue resolution and other interactions between Supplier, Health Net
and applicable third parties. Specific references to detailed text or
requirements in the Agreement may be incorporated within the Procedures Manual.

The Procedures Manual generally documents how Supplier will perform its
obligations set forth in Schedule A (Services), as well as additional detail
regarding the Functions to be performed in support of each process. The
Functions and activities to be performed by the Parties are generally indicated
within this document (including general functions and activities). The
Procedures Manual will be used by the Parties to assist in Services delivery for
day-to-day operations of the in-scope activities as well as projects undertaken
as part of the Services delivered by Supplier to Health Net. The table below
represents the table of contents for the Procedures Manual for content
identified as of the Effective Date. This content shall be supplemented during
the Term as Health Net reasonably requests.

 

Content

  

Brief Description

1.1    Organizational Overview

  

(a)    Supplier Management and Delivery Organization

   Include Supplier’s organization charts, description of functions performed,
and contact information.

(b)    Key Contacts – Health Net

   A list of contacts within Health Net that are identified by Health Net as key
users of the Services and/or perform a liaison function in regard to the
Services (by business unit, by geography).

(c)    Key Contacts – Third Parties

   A list of key third parties (maintenance providers, software providers,
telecom carriers, etc).   

1.2    Internal Performance Management Procedures

   Ongoing, “steady state” procedures and policies; content below will include
information on coordination Functions and activities to be performed by each
Party

(a)    Services Monitoring and

   Supplier will in accordance with its obligations under the Agreement

 

Schedule Q    Q - 2    Health Net / IBM Confidential

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Content

  

Brief Description

         Reporting Procedures

   describe procedures it will use to verify Service delivery on a day-to-day
basis, including its internal tracking and reporting obligations set out in the
Agreement.

(b)    Problem Management and Escalation Procedures

   Supplier will in accordance with its obligations under the Agreement describe
procedures it will use to identify Problems, report and resolve Problems, and
escalate as necessary within Supplier’s organization and/or Health Net.

(c)    Root Cause Analysis Procedures

   Supplier will in accordance with its obligations under the Agreement describe
procedures it will use to determine root cause of Problems, including
involvement of (and/or support to) applicable third parties and/or Health Net.

(d)    Service Level Measurement and Reporting Procedures

   Supplier will in accordance with its obligations under the Agreement describe
procedures it will use internally to validate Service Levels are maintained at
or above the minimum Service Levels. This process includes methodology for the
identification of potential problems, and response / mitigation process for any
identified problems. Supplier with Health Net’s assistance as reasonably
required will estimate the associated tools required to capture and track the
data needed to support the Service Level reporting.

(e)    Other relevant procedures

   Supplier will describe, as commercially appropriate for this section,
procedures that may be required to deliver the Services as mutually agreed to by
the Parties.

1.3    Project & Change Management Procedures

   Ongoing, “steady state” procedures and policies content below generally
includes information on coordination functions and activities to be performed by
each Party (by title/function)

(a)    Project Estimating Procedures

   Supplier, in accordance with its obligations under the Agreement, will
generally describe the procedures used to estimate the resource requirements and
charges associated with a proposed Project.

(b)    Project Management Procedures

   The Project management procedures generally describe the methodology and
procedures used to manage and report on Projects.

(c)    Change Management – Operational and Technical Procedures

   The Change management – operational and technical procedures generally
describe the notification process, timing, planning, authorization, and
implementation regarding Changes to the operational and technical environment.
Such procedures will include Functions and activities to be performed by Health
Net, including any necessary Health Net approvals.

(d)    Other relevant procedures

   Such other procedures (as appropriate for this section) generally describe
any other processes or policies which may be required to deliver the Services as
mutually agreed to by the Parties.

 

Schedule Q    Q - 3    Health Net / IBM Confidential

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Content

  

Brief Description

1.4    Security and Business Continuity Procedures

   Ongoing, “steady state” procedures and policies; content below generally
includes information on coordination functions and activities to be performed by
each Party (by title/function)

(a)    Physical Access & Security Procedures

   Physical Access & Security Procedures generally describe the physical access
and security procedures used at both Health Net locations and Supplier
locations.

(b)    Network Access & Security Procedures

   Network Access & Security Procedures generally describe the network access
and security procedures used as Supplier deems necessary and appropriate to
comply with Health Net’s security policies that are relevant and appropriate to
the Services.

(c)    Business Continuity

   Business Continuity Procedures generally describe the Supplier policies and
procedures used in regard to business continuity of the Services if one or more
events impact Supplier’s ability to deliver the Services (e.g., power outage,
Force Majeure Event, etc.). Supplier may reference other documents containing
comprehensive procedures (e.g., the disaster recovery Services set out in the
Agreement), but will at a minimum provide general overview within the Procedures
Manual.

1.5    Audit Support Procedures

   Ongoing, “steady state” procedures and policies content below will include
information on functions and activities, including coordination activities to be
performed by each Party (by title/function)

(a)    Auditing

  

Supplier will describe procedures for operational and/or financial audits as
required under the Agreement.

Supplier will describe notification process and procedures to resolve audit
findings.

(b)    Other relevant procedures

   Supplier will describe other procedures (as appropriate for this section)
required to deliver the Services as mutually agreed to by the Parties.

1.6    Relationship Management

  

(a)    Health Net Satisfaction Surveys

  

Supplier will describe the process to be used for conducting customer
satisfaction surveys in accordance with its obligations under the Agreement.

Content will include procedures regarding action items and attempts to resolve
Service Recipient issues.

(b)    Users

   Supplier will describe procedures and responsibilities regarding responding
to users’ problems, requests, and questions.

 

Schedule Q    Q - 4    Health Net / IBM Confidential

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Content

  

Brief Description

(c)    Third Party Vendors

  

Supplier will describe procedures for relationship regarding third party vendors
which may provide services or products that are ancillary to (or support) the
overall delivery of Services.

Procedures and coordination with key third party vendors will be documented.

(d)    Other Third Parties

   Supplier will describe procedures for other contact or requests from other
third parties in regard to the Services.

(e)    Other relevant procedures

   Supplier will describe other procedures (as appropriate for this section)
required to deliver the Services as mutually agreed to by the Parties.

1.7    Supplier Operational Procedures

   Ongoing, “steady state” procedures and policies content below will include
information on functions and activities, including coordination activities to be
performed by each Party (by title/function) Operational Procedures (by function,
as applicable)    Supplier will describe the activities that Supplier will
undertake in order to provide the Services in accordance with the Agreement,
including those directions, supervision, monitoring, staffing, reporting,
planning and oversight activities normally undertaken by Supplier which shall be
consistent with those Supplier activities used to provide services similar to
the Services.

 

Schedule Q    Q - 5    Health Net / IBM Confidential

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SCHEDULE R

[INTENTIONALLY LEFT BLANK]

 

Schedule R    R - 1    Health Net / IBM Confidential

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SCHEDULE S

ASSET RESPONSIBILITY ALLOCATION MATRIX

 

Schedule S    S - 1    Health Net / IBM Confidential

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SCHEDULE S

ASSET RESPONSIBILITY ALLOCATION MATRIX

 

1. Framework

This Section 1 creates a framework under which the Parties shall classify and
allocate Financial Responsibility for certain types of Equipment, Software, and
Third Party Service Contracts (collectively, “Assets”).

 

Category

  Ownership
(1)   Financial Responsibility (2)   

Charging
Mechanism
(3)

  Administrative
Responsibility
(4)   Operational Responsibility (5)     Ongoing
Operations   Upgrades/
Enhancements   Growth
(7)   Technology
Refresh (8)        Install   Support   Maintain   Move/
Add/
Change   Disaster
Recovery
(6) Assumed   Supplier   Supplier   Supplier   Supplier   Supplier    Base
Charges   Supplier   Supplier   Supplier   Supplier   Supplier   Supplier
Managed – In ASC   HNT   Supplier   Supplier   Supplier   Supplier    Base
Charges   Supplier   Supplier   Supplier   Supplier   Supplier   Supplier
Managed – As Pass Through   HNT   Supplier   Supplier   Supplier   Supplier   

Managed-As Pass Through Expense

(as set forth in the General Terms and Conditions )

  Supplier   Supplier   Supplier   Supplier   Supplier   Supplier Retained   HNT
  HNT   HNT   HNT   HNT    Retained   HNT   Supplier   Supplier   Supplier  
Supplier   Supplier Pure-Pass Through   HNT   HNT   HNT   HNT   HNT   

Pure Pass Through Expense

(as set forth in the General Terms and Conditions)

  HNT   HNT   HNT   HNT   HNT   HNT

 

[1]

This column specifies the Party that is intended to have legal responsibility
for the Asset (i.e., ownership if it is an owned Asset, or a contractual
relationship with the third party if it is a lease or third party service
contract). If this column shows Supplier for a particular Asset category, then
the Parties have agreed to assign any Existing Health Net Assets within such
Asset category to Supplier, and such categorization is referred to as “Assumed”.
If this column shows Health Net, then the Parties have agreed that Health Net
will retain legal responsibility for the asset.

 

[2]

These columns specify which Party shall have Financial Responsibility for an
Asset’s capital cost, which: (i) for Equipment or Software, means that such
Party shall be responsible for all current (applicable immediately after the
effective date of such Financial Responsibility) and future financial costs and
expenses of acquisition, lease, license, or other ownership costs for such
Assets, including upgrades, enhancements, new releases, expanded license rights,
changes due to growth and technology refresh (including third party hardware and
software maintenance agreements); and (ii) for third party service contracts,
means that such Party shall be responsible for all current and future financial
costs and expenses arising from the delivery of the Services using such
contract.

 

[3]

This column identifies the charging mechanism through which Supplier is
compensated for the costs and profit associated with any item for which Supplier
has Financial Responsibility. “Base Charges” means that Supplier has Financial
Responsibility and is fully compensated for the forgoing through the Annual
Service Charge, as adjusted by ARCs and RRCs and adjustments to the Hardware
Services Charge required under Schedule C. “Managed As Pass-Through Expense”

 

Schedule S    S - 2    Health Net / IBM Confidential

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and “Pure Pass-Through Expense” shall have the meaning provided in Sections
9.1(a) and (b), respectively, of the General Terms and Conditions. “Retained”
means that Health Net has retained these costs.

 

[4]

This column specifies which Party shall be responsible for managing an Asset,
including (i) the tracking of renewal dates and license compliance provisions,
(ii) providing notice to the Party with legal responsibility when actions need
to be taken with respect to such Asset (e.g., notification of renewal of the
license for such Asset), and (iii) receiving invoices from third party vendors,
promptly reviewing such invoices, and providing to the Party with Financial
Responsibility the original invoice together with a statement identifying which
charges are proper and valid.

 

[5]

This column specifies which Party shall be responsible for operational support
of an Asset, generally including (i) the unpacking, configuration, staging,
setup and installation of such Asset; (ii) the support of such Asset; (iii) the
maintenance of such Asset; (iv) moves/adds/changes; and (v) disaster recovery,
all as further set forth in Schedule A.

 

[6]

Where this Schedule S identifies Supplier as having responsibility with respect
to disaster recovery, such Services shall be provided in accordance with and
only to the extent of Supplier’ responsibilities with respect to disaster
recovery as provided in Schedule A.

 

[7]

“Growth” means, without limiting the application of ARCs and RRCs in accordance
with Schedule C, additional Equipment, Software licenses, and Services required
to accommodate Health Net’s request for increased Service volumes (e.g.,
additional Installed MIPS, new Servers). For example, if Health Net requires a
new Web Server, Supplier will install and configure the new server with all
Software from Schedule J required by Health Net for the web server and Financial
Responsibility for such Software shall be allocated as provided in the matrix
above.

 

[8]

“Refresh” has the meaning given in Section 2.21 of Schedule A.

 

2. Asset Schedules

(a) Assets existing as of the Effective Date (“Existing Health Net Assets”) are
classified in Schedules I (Third Party Service Contracts), J (Software), and N
(Equipment) (collectively, “Asset Schedules”). The Parties shall update the
Asset Schedules pursuant to the Joint Verification Process described in Exhibit
C-10, and subsequently during the Term in accordance with this Section 2. Each
Asset added to an Asset Schedule shall be classified within one of the five
Asset categories in the matrix above.

(b) Supplier shall validate and update the Asset inventories during the Joint
Verification Process as set forth in Exhibit C-10, and thereafter shall maintain
accurate and current inventories of Assets in use within Health Net’s
environment in accordance with Schedule A. Supplier shall provide Health Net
with access to such Asset inventories upon request at any time during the Term.

(c) At any time during the Term, Health Net can request, at no additional
charge, (i) that an Asset classified as Managed As Pass-Through be reclassified
as Retained or (ii) that an Asset classified as Pure Pass-Through be removed
from the Asset Schedules all together. In addition, on a quarterly basis,
Supplier shall provide Health Net with proposed updates to the Asset Schedules
reflecting all changes to the Equipment, Software, and third party service
contracts made in the prior quarter (e.g., new lease agreements; changes in
Software products). At Health Net’s request, the Parties shall execute
amendments to this Agreement with mutually agreed revisions to the Asset
Schedules.

 

Schedule S    S - 3    Health Net / IBM Confidential

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3. Phase Out

(a) “Phase Out Assets” means those certain Assets that have a date (e.g., such
as “plus 1 from signing” inserted in the column labelled “Phase Out Date” on
Schedules I, J or N). Health Net is only obligated to make such Phase Out Assets
available to Supplier until the designated phase out date in Schedule I, J or N.
After such date, Health Net shall no longer be obligated to make any such Phase
Out Assets available to provide the Services subject to 3(b) below.

(b) With respect to such Phase Out Assets that Health Net may discontinue making
available as set forth in paragraph (a) above, Supplier shall have the right to
request Health Net to continue to make any such Phase Out Asset available to
Supplier for the sole purpose of providing Services to Health Net pursuant to
this Agreement, by providing not less than thirty (30) days prior written notice
to Health Net prior to such date set forth on Schedule I, J or N (as
applicable); provided that (i) upon the date that Health Net would have
otherwise been permitted to discontinue making such Phase Out Asset available,
such Asset shall be deemed to be Managed In ASC, (ii) at any time after such
discontinuance date, if Supplier provides written notice to Health Net
requesting Health Net to exercise any termination right with respect to such
Phase Out Asset, then Health Net shall exercise such right, provided Supplier
shall be responsible for any termination charges or fees associated with such
termination if such fees were the direct result of an extension of making such
Phase Out Asset available to Supplier, and (iii) if the Phase Out Asset cannot
be terminated by the end of the Term, upon the effective date of expiration or
termination of the Phase Out Asset contract, Supplier shall issue Health Net a
credit equal to the remaining lease, maintenance or other related payments to
the licensor, lessor or other third party (as applicable) Health Net actually
incurs, on an Out of Pocket Expense basis, in connection with such Asset to the
extent Health Net would not have otherwise incurred such Out of Pocket expenses
except for the Agreement. Upon request from Supplier, Health Net shall provide
Supplier with a copy of the relevant Phase Out Asset contract. Notwithstanding
the foregoing, if Health Net elects to use a Phase Out Asset for purposes
outside the scope of Services, then the charges for such Phase Out Assets shall
be equitably pro rated to account for Supplier’s continued use of the Phase Out
Asset to provide Services and Health Net’s use of the Phase Out Asset for such
other purposes.

(c) Unless such Phase Out extension is requested by Supplier as set forth in
3(b) above, Supplier shall incur no additional expenses related to Phase Out
Assets unless provided for elsewhere under the Agreement, including this
Schedule S. For clarity, such Phase Out Assets shall be extended at no cost to
Supplier in the event that such extension is a result of a Health Net suspension
or other extension of Transformation or Transition pursuant to Section 13.5(b)
of the Agreement and not due to a Supplier request.

 

Schedule S    S - 4    Health Net / IBM Confidential

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SCHEDULE T

BILL OF SALE

 

Schedule T    T - 1    Health Net / IBM Confidential

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Final Execution Version

 

SCHEDULE T

BILL OF SALE

This Bill of Sale is entered into, to be effective as of the          day of
            , 200[9] (the “Sale Effective Date”), by and between Health Net,
Inc., a Delaware corporation(“Health Net”) and International Business Machines
Corporation, a New York corporation (“IBM”). IBM and Health Net entered into
that certain Master Services Agreement dated August x, 2008 (the “Agreement”).
As used in this Bill of Sale, capitalized terms used and not otherwise defined
shall have the meanings given them in the Agreement. Health Net agrees to convey
and IBM agrees to purchase those assets listed in Exhibit 1 to this Bill of Sale
(collectively the “Purchased Assets”).

In accordance with Section 11 of Schedule C of the Agreement, IBM shall pay
             US dollars (the “Purchased Assets Price”)on the Sale Effective
Date, pursuant to payment directions provided by Health Net, in full
satisfaction of the Purchased Assets being sold by Health Net to IBM.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Bill
of Sale and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged,

 

1. Health Net hereby irrevocably sells, transfers, conveys, and assigns to IBM,
its successors and assigns, all of Health Net’s right, title, and interest in
and to the Purchased Assets.

 

2. IBM hereby accepts the sale, transfer, conveyance, and assignment of the
Purchased Assets.

 

3. Health Net represents and warrants that it has clear title to all of the
Purchased Assets and that all of the Purchased Assets are being transferred free
and clear of any and all liabilities, obligations, liens, claims, and
encumbrances of every kind and character whatsoever.

 

4. EXCEPT AS SET FORTH HEREIN, HEALTH NET MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PURCHASED ASSETS, INCLUDING,
WITHOUT LIMITATION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, AND
THE PURCHASED ASSETS ARE BEING CONVEYED “AS IS” WHERE IS.

 

5. This Bill of Sale may be executed in any number of counterparts, each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.

 

6. This Bill of Sale and performance under it shall be governed by and construed
in accordance with the laws of the state of New York without regard to its
choice of law principles.

 

7. For all litigation which may arise with respect to this Bill of Sale, the
Parties irrevocably and unconditionally submit (a) to the exclusive jurisdiction
and venue (and waive any claim of forum non conveniens and any objections as to
laying of venue) of the United States District Court for the Central District of
California, or (b) if such court does not have subject matter jurisdiction, to
the Superior Court of the State of California, Los Angeles County in connection
with any action, suit or proceeding arising out of or relating to this
Agreement. The Parties further consent to the jurisdiction of any state court
located within a district that encompasses assets of a Party against which a
judgment has been rendered for the enforcement of such judgment or award against
the assets of such Party.

 

8. This Bill of Sale is a Schedule to the Agreement.

 

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IN WITNESS WHEREOF, the undersigned have caused their duly authorized officers
to execute this Bill of Sale on the date first written above.

 

International Business Machines Corporation By:     Name:   Title:   Date:  

 

Health Net, Inc. By:     Name:   Title:   Date:  

 

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ATTACHMENT 1

LIST OF PURCHASED ASSETS

As of the Effective Date, the Purchased Assets are listed in the Exhibit N-1 to
Schedule N to the Agreement. Such list will be updated pursuant to Section 11.1
of Schedule C and the updated list will be attached to this Bill of Sale upon
execution by the Parties.

 

Schedule T    T - 1    Health Net / IBM Confidential

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SCHEDULE U

GLOSSARY

 

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SCHEDULE U

GLOSSARY

The following capitalized terms, when used in the Agreement, will have the
meanings given below unless the context requires otherwise. In the event of a
conflict between the definitions in the body of the General Terms and Conditions
and this GLOSSARY, the provisions in the body of General Terms and Conditions
shall prevail.

 

Defined Term

  

Meaning

  

Primary Use Location

***    Has the meaning set forth in Section 6.5(b) of Schedule C to the General
Terms and Conditions   

Schedule C

“Acceptance Criteria”    Has the meaning set forth in Section 1.2(b)(vi) of
Exhibit A-10 to Schedule A of the General Terms and Conditions   

Exhibit A-10

“Acceptance Period”    Has the meaning set forth in Section 2 of Annex A-10-1 to
Exhibit A-10 to Schedule A of the General Terms and Conditions   

Annex A-10-1

“Acceptance Tests”    Has the meaning set forth in Section 4(a) of Annex A-10-1
to Exhibit A-10 to Schedule A of the General Terms and Conditions   

Annex A-10-1

“Actual HSC Expenditures”    Has the meaning set forth in Section 6.3(c) of
Schedule C to the General Terms and Conditions   

Schedule C

“Addendum”    Has the meaning set forth in the introductory paragraph of
Schedule K to the General Terms and Conditions   

Schedule K

“Adjustable Charges”    Has the meaning set forth in Section 8.1(a) of Schedule
C to the General Terms and Conditions   

Schedule C

“Affected Employees”    Has the meaning set forth in Section 2(a) of Schedule E
to the General Terms and Conditions   

Schedule E

“Affected Software”    Has the meaning set forth in Section 2.7(a) of Schedule L
to the General Terms and Conditions   

Schedule L

“Affiliate”    Has the meaning set forth in Section 2.1(a) of the General Terms
and Conditions   

Gen’l Terms

“Agreement”    Has the meaning set forth in Section 2.1(b) of the General Terms
and Conditions   

Gen’l Terms

“Amount at Risk”    Has the meaning set forth in Section 2.1(a) of Schedule B to
the General Terms and Conditions   

Schedule B

 

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Defined Term

  

Meaning

  

Primary Use Location

“Annual Customer Satisfaction”    Has the meaning set forth in Section 1.1 of
Exhibit B-1 to Schedule B to the General Terms and Conditions   

Exhibit B-1

“Annual Refresh Plan”    Has the meaning set forth in 2.20(b)(iv) of Schedule A
to the General Terms and Conditions   

Schedule A

“Annual Services Charge”    Has the meaning set forth in Section 1 of Schedule C
to the General Terms and Conditions   

Schedule C

“Application”    Has the meaning set forth in Section 2.1(c) of the General
Terms and Conditions   

Gen’l Terms

“Application Migration Transition Manager”    Has the meaning set forth in
Exhibit A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Application Software”    Has the meaning set forth in Section 2.1(c) of the
General Terms and Conditions   

Gen’l Terms

“Approved Leave”    Has the meaning set forth in Section 2(b) of Schedule E to
the General Terms and Conditions   

Schedule E

“Approved Subcontractor”    Has the meaning set forth in Section 7.7(b) of the
General Terms and Conditions   

Gen’l Terms

“Archived Tape”    Has the meaning set forth in Section 1(b) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“ARCs”    Has the meaning set forth in Section 1 of Schedule C to the General
Terms and Conditions   

Schedule C

“ARC/RRC Rate”    Has the meaning set forth in Section 2.1(b) of Schedule C to
the General Terms and Conditions   

Exhibit C-4

“AS/400 Transition Manager”    Has the meaning set forth in Exhibit A-2 to
Schedule A to the General Terms and Conditions   

Exhibit A-2

“ASC”    Has the meaning set forth in Section 1 of Schedule C to the General
Terms and Conditions   

Schedule C

“ASC Invoice”    Has the meaning set forth in Section 10.1(a) of the General
Terms and Conditions   

Gen’l Terms

“Asset”    Has the meaning set forth in Section 1 of Schedule S to the General
Terms and Conditions   

Schedule S

“Asset Category”    Has the meaning set forth in Section 1(a) of Exhibit C-10 to
Schedule C to the General Terms and Conditions   

Exhibit C-10

 

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Defined Term

  

Meaning

  

Primary Use Location

“Asset Management Transition Manager”    Has the meaning set forth in Exhibit
A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Asset Purchase Price”    Has the meaning set forth in Section 11.1(a) of
Schedule C to the General Terms and Conditions   

Schedule C

“Asset Schedules”    Has the meaning set forth in Section 2(a) of Schedule S to
the General Terms and Conditions   

Schedule S

“Assumed”    Has the meaning set forth in Footnote 1 of Schedule S to the
General Terms and Conditions   

Schedule S

“AT&T VPN Attachment”    Has the meaning set forth in Section 14 of Schedule C
to the General Terms and Conditions   

Schedule C

“Auditors”    Has the meaning set forth in Section 18.1(a) of the General Terms
and Conditions   

Gen’l Terms

“Audits”    Has the meaning set forth in Section 18.1(a) of the General Terms
and Conditions   

Gen’l Terms

“Automated Call Distribution (ACD) Services”    Has the meaning set forth in
Section 5.12(a) of Schedule A to the General Terms and Conditions   

Schedule A

“Background Checks”    Has the meaning set forth in Section 7.2(a) of the
General Terms and Conditions   

Gen’l Terms

“Backup / Recovery Transition Manager”    Has the meaning set forth in Exhibit
A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Balance Sheet Items”    Has the meaning set forth in Section 10.2(a)(v) of
Schedule C to the General Terms and Conditions   

Schedule C

“Bankruptcy Code”    Has the meaning set forth in Section 15.5(b) of the General
Terms and Conditions   

Gen’l Terms

“Base Charges”    Has the meaning set forth in Footnote 3 of Schedule S to the
General Terms and Conditions   

Schedule S

“Base Lease Interest Rate”    Has the meaning set forth in Section 6.3(c)(i) of
Schedule C to the General Terms and Conditions   

Schedule C

“Baseline Project Pool”    Has the meaning set forth in Section 5.2(a) of
Schedule C to the General Terms and Conditions   

Schedule C

 

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Defined Term

  

Meaning

  

Primary Use Location

“Base Year Index”    Has the meaning set forth in Section 8.1(b) of Schedule C
to the General Terms and Conditions   

Schedule C

“Baseline Project Pool”    Has the meaning set forth in Section 5.2(a) of
Schedule C to the General Terms and Conditions   

Schedule C

“Baselining Period”    Has the meaning set forth in Section 4.2(c)(i) of
Schedule B to the General Terms and Conditions   

Schedule B

***    Has the meaning set forth in Section 9.4(g)(ii) of the General Terms and
Conditions   

Gen’l Terms

“Benchmarker”    Has the meaning set forth in Section 9.4(c) of the General
Terms and Conditions   

Gen’l Terms

“Benchmarking Adjustment Caps”    Has the meaning set forth in Section
9.4(g)(iii) of the General Terms and Conditions   

Gen’l Terms

“Benchmarking Commencement Date”    Has the meaning set forth in Section 9.4(b)
of the General Terms and Conditions   

Gen’l Terms

“Benchmark Level”    Has the meaning set forth in Section 9.4(g)(i) of the
General Terms and Conditions   

Gen’l Terms

“Benchmark Process”    Has the meaning set forth in Section 9.4(d) of the
General Terms and Conditions   

Gen’l Terms

“Beneficiary”    Has the meaning set forth in Section 2.1(d) of the General
Terms and Conditions   

Gen’l Terms

“Benefit Program”    Has the meaning set forth in Section 2.1(e) of the General
Terms and Conditions   

Gen’l Terms

“Business Associate”    Has the meaning set forth in the introductory paragraph
of Schedule K to the General Terms and Conditions   

Schedule K

“Business Continuity Recovery Point Objective”    Has the meaning set forth in
2.22(e)(ii)(B) of Schedule A to the General Terms and Conditions   

Schedule A

“Business Continuity Restoration Time”    Has the meaning set forth in
2.22(e)(ii)(A) of Schedule A to the General Terms and Conditions   

Schedule A

“Business Day”    Has the meaning set forth in Section 2.1(b) of Schedule B to
the General Terms and Conditions   

Schedule B

“Business Hours”    Has the meaning set forth in Section 2.1(c) of Schedule B to
the General Terms and Conditions   

Schedule B

 

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Defined Term

  

Meaning

  

Primary Use Location

“C & A”    Has the meaning set forth in Section 2.2(c)(i) of Exhibit A-6 to
Schedule A to the General Terms and Conditions   

Exhibit A-6

“Call”    Has the meaning set forth in Section 5 of Exhibit C-1 to Schedule C to
the General Terms and Conditions   

Exhibit C-1

“Call Center Agent”    Has the meaning set forth in Section 7.3(c) of Exhibit
C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Capacity Basis”    Has the meaning set forth in Section 13 of Schedule C to the
General Terms and Conditions   

Schedule C

“Capital Expenditures”    Has the meaning set forth in Section 6.3(a) of
Schedule C to the General Terms and Conditions   

Schedule C

“Cascade”    Has the meaning set forth in Section 2(c)(ii) of Exhibit C-9 to
Schedule C to the General Terms and Conditions   

Exhibit C-9

“Cause”    Has the meaning set forth in Section 2(c) of Schedule E to the
General Terms and Conditions   

Schedule E

“CBOC”    Has the meaning set forth in Section 1.1(a)(ii)(D) of Exhibit A-6 to
Schedule A to the General Terms and Conditions   

Exhibit A-6

“Change”    Has the meaning set forth in Section 17.5(a) of the General Terms
and Conditions   

Gen’l Terms

“Change Control Process”    Has the meaning set forth in Section 17.5(a) of the
General Terms and Conditions   

Exhibit A-7

“Change of Control of Health Net”    Has the meaning set forth in Section
16.1(d) of the General Terms and Conditions   

Gen’l Terms

“Change of Control of Supplier”    Has the meaning set forth in Section 16.1(e)
of the General Terms and Conditions   

Gen’l Terms

“Change Management Services” or “CM”    Has the meaning set forth in Section
2.17(b) of Schedule A.   

Schedule A

“Change Notice” or “CN”    Has the meaning set forth in Section 2.1 of Exhibit
A-7 to Schedule A to the General Terms and Conditions   

Exhibit A-7

 

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Defined Term

  

Meaning

  

Primary Use Location

“Charges”    Has the meaning set forth in Section 1 of Schedule C to the General
Terms and Conditions   

Schedule C

“Claim    Has the meaning set forth in Section 23.1 of the General Terms and
Conditions   

Gen’l Terms

“CM”    Has the meaning set forth in Section 2.17(b) of Schedule A to the
General Terms and Conditions   

Schedule A

“Code A”    Has the meaning set forth in Section 4.2(a) of Schedule B to the
General Terms and Conditions   

Schedule B

“Code B”    Has the meaning set forth in Section 4.2(b) of Schedule B to the
General Terms and Conditions   

Schedule B

“Code C”    Has the meaning set forth in Section 4.2(c) of Schedule B to the
General Terms and Conditions   

Schedule B

“COLA”    Has the meaning set forth in Section 8.1(a) of Schedule C to the
General Terms and Conditions   

Schedule C

“Commercially Available”    Has the meaning set forth in Section 2.1(f) of the
General Terms and Conditions   

Gen’l Terms

“Commercially Reasonable Efforts    Has the meaning set forth in Section 2.1(g)
of the General Terms and Conditions   

Gen’l Terms

“Comparator”    Has the meaning set forth in Section 9.4(e)(i) of the General
Terms and Conditions   

Gen’l Terms

“Confidential Information”    Has the meaning set forth in Section 21.1(a) of
the General Terms and Conditions   

Gen’l Terms

“Configuration Management Transition Manager”    Has the meaning set forth in
Exhibit A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Consequential Damages”    Has the meaning set forth in Section 24.2(a) of the
General Terms and Conditions   

Gen’l Terms

“Consumer Price Index”    Has the meaning set forth in Section 8.1(f) of
Schedule C to the General Terms and Conditions   

Schedule C

“Contract Governance”    Has the meaning set forth in Section 1 of Schedule G to
the General Terms and Conditions   

Schedule G

“Contract Year”    Has the meaning set forth in Section 2.1(d) of the General
Terms and Conditions   

Gen’l Terms

“Control” and its derivatives    Has the meaning set forth in Section 2.1(i) of
the General Terms and Conditions   

Gen’l Terms

 

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Defined Term

  

Meaning

  

Primary Use Location

“COOP”    Has the meaning set forth in Section 2.2(h)(i) of Exhibit A-6 to
Schedule A to the General Terms and Conditions   

Exhibit A-6

“Core Personnel”    Has the meaning set forth in Section 6.1(a) of Schedule E to
the General Terms and Conditions   

Schedule E

“Core Personnel Information”    Has the meaning set forth in Section 6.1(a) of
Schedule E to the General Terms and Conditions   

Schedule E

“CPI-U”    Has the meaning set forth in Section 8.1(f) of Schedule C to the
General Terms and Conditions   

Schedule C

“Critical Service Level or CSL”    Has the meaning set forth in Section 2.1(d)
of Schedule B to the General Terms and Conditions   

Schedule B

“Critical Service Level Failure”    Has the meaning set forth in Section 2.1(e)
of Schedule B to the General Terms and Conditions   

Schedule B

“Cross Tower Charge”    Has the meaning set forth in Section 2 of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“Cross Tower Services”    Has the meaning set forth in Section 2.1(o)(i) of
Schedule C to the General Terms and Conditions   

Schedule C

“Cross Tower Transition Manager”    Has the meaning set forth in Exhibit A-2 to
Schedule A to the General Terms and Conditions   

Exhibit A-2

“Currency Requirement”    Has the meaning set forth in 2.20(a)(iii) of Schedule
A to the General Terms and Conditions   

Schedule A

“Current Contract”    Has the meaning set forth in Section A of Schedule K to
the General Terms and Conditions   

Schedule K

“CY1 Novell Server Deadband”    Has the meaning set forth in Section 4.3(f) of
Schedule C to the General Terms and Conditions   

Schedule C

“DASD”    Has the meaning set forth in Section 3.3(a) of Exhibit C-1 to Schedule
C to the General Terms and Conditions   

Exhibit C-1

“DASD Deadband”    Has the meaning set forth in Section 4.3(c) of Schedule C to
the General Terms and Conditions   

Schedule C

“DAVA”    Has the meaning set forth in Section 1.1(a)(ii)(E) of Exhibit A-6 to
Schedule A to the General Terms and Conditions   

Exhibit A-6

 

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Defined Term

  

Meaning

  

Primary Use Location

“Data Center Relocation Transition Manager”    Has the meaning set forth in
Exhibit A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Data Center Services”    Has the meaning set forth in Section 3(a) of Schedule
A to the General Terms and Conditions   

Schedule A

“Data Center Transformation Date”    Has the meaning set forth in Section
24.2(f) of the General Terms and Conditions   

Gen’l Terms

“Data MACs”    Has the meaning set forth in the Introduction to Exhibit C-9 to
Schedule C to the General Terms and Conditions   

Exhibit C-9

“Data Network”    Has the meaning set forth in Section 4(b) of Schedule A to the
General Terms and Conditions   

Schedule A

“Data Network Services”    Has the meaning set forth in Section 4(a) of Schedule
A to the General Terms and Conditions   

Schedule C

“Database Instance”    Has the meaning set forth in Section 4.9(a) of Exhibit
C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-10

“DBA Transition Manager”    Has the meaning set forth in Exhibit A-2 to Schedule
A to the General Terms and Conditions   

Exhibit A-2

“Deliverable”    Has the meaning set forth in Section 2.1(j) of the General
Terms and Conditions   

Gen’l Terms

“Deliverable Defect”    Has the meaning set forth in Section 4(e) of Annex
A-10-1 to Exhibit A-10 to Schedule A to the General Terms and Conditions   

Annex A-10-1

“Dependents”    Has the meaning set forth in Section 4.1(e) of Schedule E to the
General Terms and Conditions   

Schedule E

“Derivative Work”    Has the meaning set forth in Section 15.1(c) of the General
Terms and Conditions   

Gen’l Terms

“Desk Phone Services”    Has the meaning set forth in Section 5.6(a) of Schedule
A to the General Terms and Conditions   

Schedule A

“Deskside Support Transition Manager”    Has the meaning set forth in Exhibit
A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Desktop IMAC”    Has the meaning set forth in Section 6.5(a) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

 

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Defined Term

  

Meaning

  

Primary Use Location

“Desktop IMAC ARC Deadband”    Has the meaning set forth in Section 4.3(b) of
Schedule C to the General Terms and Conditions   

Schedule C

“Desktop IMAC RRC Deadband”    Has the meaning set forth in Section 4.3(b)(i) of
Schedule C to the General Terms and Conditions   

Schedule C

“Desktop Workstation”    Has the meaning set forth in Section 6.2 of Exhibit C-1
to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Developed Material”    Has the meaning set forth in Section 15.3(a) of the
General Terms and Conditions   

Gen’l Terms

“Development Servers Available for Use”    Has the meaning set forth in Section
2.3(b)(i) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Development Servers Availability”    Has the meaning set forth in Section
2.3(a) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Development Servers Downtime”    Has the meaning set forth in Section
2.3(b)(ii) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Development Servers Maintenance Window”    Has the meaning set forth in Section
2.3(b)(iii) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Development Servers Scheduled Uptime”    Has the meaning set forth in Section
2.3(b)(iv) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“DHCP”    Has the meaning set forth in Section 4.9 of Schedule A to the General
Terms and Conditions   

Schedule A

“DHHS”    Has the meaning set forth in Section 2(O) of Schedule K to the General
Terms and Conditions   

Schedule K

“DIACAP”    Has the meaning set forth in Section 2.1(c)(i) of Exhibit A-6 to
Schedule A to the General Terms and Conditions   

Exhibit A-6

“Disaster Recovery Transition Manager”    Has the meaning set forth in Exhibit
A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Discovery and Joint Verification Transition Manager”    Has the meaning set
forth in Exhibit A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

 

Schedule U    U - 10    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Discovery Notice”    Has the meaning set forth in Section 2.8(a) of Schedule L
to the General Terms and Conditions   

Schedule L

“Disengagement Assistance”    Has the meaning set forth in Section 2.1(k) of the
General Terms and Conditions   

Schedule L

“Disengagement Assistance Period”    Has the meaning set forth in Section 2.1(l)
of the General Terms and Conditions   

Schedule L

“Disengagement Plan”    Has the meaning set forth in Section 1.2(a) of Schedule
L to the General Terms and Conditions   

Schedule L

“Disengagement Event”    Has the meaning set forth in Section 2(f) of Schedule E
to the General Terms and Conditions   

Schedule E

“Dispute Date”    Has the meaning set forth in Section 26.1(a)(i) of the General
Terms and Conditions   

Gen’l Terms

“Disputed Charges”    Has the meaning set forth in Section 10.7(a) of the
General Terms and Conditions   

Gen’l Terms

“Disputed Charges Cap”    Has the meaning set forth in Section 10.7(b) of the
General Terms and Conditions   

Gen’l Terms

“DNS”    Has the meaning set forth in Section 4.9 of Schedule A to the General
Terms and Conditions   

Schedule A

“Documentation”    Has the meaning set forth in Section 2.1(m) of the General
Terms and Conditions   

Gen’l Terms

“Documentation Services”    Has the meaning set forth in Section 2.20(a) of
Schedule A to the General Terms and Conditions   

Schedule A

“DoD SI”    Has the meaning set forth in Section 2.2(a)(i) of Exhibit A-6 to
Schedule A to the General Terms and Conditions   

Exhibit A-6

“Effective Date”    Has the meaning set forth in the preamble to the General
Terms and Conditions   

Gen’l Terms

“Effective Date System Images”    Has the meaning set forth in Section 4.5 of
Exhibit C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Eligible Supplier Employees”    Has the meaning set forth in Section
10.2(a)(iv) of Schedule C to the General Terms and Conditions   

Schedule C

“E-Mail Mailbox”    Has the meaning set forth in Section6.6(a) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

 

Schedule U    U - 11    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“End of Term***”    Has the meaning set forth in Section 10.3(b) of Schedule C
to the General Terms and Conditions   

Schedule C

“End of Term Remaining HSC Expenditures”    Has the meaning set forth in Section
10.3(a)(ii) of Schedule C to the General Terms and Conditions   

Schedule C

“End of Term Stranded HSC Costs”    Has the meaning set forth in Section
10.3(a)(i) of Schedule C to the General Terms and Conditions   

Schedule C

“End User”    Has the meaning set forth in Section 2.1(o) of the General Terms
and Conditions   

Gen’l Terms

“End User Resources”    Has the meaning set forth in Section 6(b) of Schedule A
to the General Terms and Conditions   

Schedule A

“End User Services”    Has the meaning set forth in Section 6(a) of Schedule A
to the General Terms and Conditions   

Schedule C

“End User Services and Help Desk Satisfaction”    Has the meaning set forth in
Section 1.1(a) of Exhibit B-1 to Schedule B to the General Terms and Conditions
  

Exhibit B-1

“Enterprise Security Management Services”    Has the meaning set forth in
Section 8 of Schedule A to the General Terms and Conditions   

Schedule A

“EPHI”    Has the meaning set forth in Section A of Schedule K to the General
Terms and Conditions   

Schedule K

“Equipment”    Has the meaning set forth in Section 2.1(p) of the General Terms
and Conditions   

Gen’l Terms

“Equipment Refresh Schedule”    Has the meaning set forth in 2.20(a)(ii) of
Schedule A to the General Terms and Conditions   

Schedule A

“Existing DR Contracts”    Has the meaning set forth in 2.23(j) of Schedule A to
the General Terms and Conditions   

Schedule A

“Existing Health Net Assets”    Has the meaning set forth in Section 2(a) of
Schedule S to the General Terms and Conditions   

Schedule S

“Existing Versions”    Has the meaning set forth in 2.20(a)(iii) of Schedule A
to the General Terms and Conditions   

Schedule A

“Extraordinary Event”    Has the meaning set forth in Section 8.4(a) of Schedule
C to the General Terms and Conditions   

Schedule C

 

Schedule U    U - 12    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Fair Market Value”    Has the meaning set forth in Section 2(g) of Schedule C
to the General Terms and Conditions   

Schedule C

“Final Benchmarker Report”    Has the meaning set forth in Section 9.4(f) of the
General Terms and Conditions    Gen’l Terms “Financial Responsibility”    Has
the meaning set forth in Section 2.1(e) of Schedule C to the General Terms and
Conditions    Schedule C “Financial Reconciliation Period”    Has the meaning
set forth in Section 3.7 of Schedule L to the General Terms and Conditions   
Schedule L “Financial Responsibility Model”    Has the meaning set forth in
Section 2(f) of Schedule C to the General Terms and Conditions    Schedule C,
Schedule S “Firewall Hard MAC”    Has the meaning set forth in Section 7.2(m) of
Exhibit C-1 to Schedule C to the General Terms and Conditions    Exhibit C-1
“Firewall Soft MAC”    Has the meaning set forth in Section 7.2(n) of Exhibit
C-1 to Schedule C to the General Terms and Conditions    Exhibit C-1 “Flexible
Spending Accounts”    Has the meaning set forth in Section 4.7 of Schedule E to
the General Terms and Conditions    Schedule E “FMV”    Has the meaning set
forth in Section 2(g) of Schedule C to the General Terms and Conditions   

Schedule C

“Force Majeure Event”    Has the meaning set forth in Section 24.3(a) of the
General Terms and Conditions   

Gen’l Terms

“Former Health Net Affiliate”    Has the meaning set forth in Section 2.1(r) of
the General Terms and Conditions   

Gen’l Terms

“Form Invoice”    Has the meaning set forth in Section 10.1(c) of the General
Terms and Conditions   

Gen’l Terms

“Functions”    Has the meaning set forth in Section 3.2(a) of the General Terms
and Conditions   

Gen’l Terms

“Furnishing Party”    Has the meaning set forth in Section 21.1(a) of the
General Terms and Conditions   

Gen’l Terms

“General Systems Available for Use”    Has the meaning set forth in Section
1.3(a)(ii) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

 

Schedule U    U - 13    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“General Systems Availability”    Has the meaning set forth in Section 1.3(a)(i)
of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“General Systems Downtime”    Has the meaning set forth in Section 1.3(a)(iii)
of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“General Systems Maintenance Window”    Has the meaning set forth in Section
1.3(a)(iv) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“General Systems Schedule Uptime”    Has the meaning set forth in Section
1.3(a)(v) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“General Terms and Conditions”    Has the meaning set forth in Section 1.3 of
the General Terms and Conditions   

Gen’l Terms

“GLB Act”    Has the meaning set forth in Section 14.6(a) of the General Terms
and Conditions   

Gen’l Terms

“Growth”    Has the meaning set forth in Footnote 7 of Schedule S to the General
Terms and Conditions   

Schedule S

“Hard MAC with Wire”    Has the meaning set forth in Section 7.3(f) of Exhibit
C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Hard MAC without Wire”    Has the meaning set forth in Section 7.3(e) of
Exhibit C-1 to Schedule C to the General Terms and Conditions    Exhibit C-1
“Hardware Services Charge”    Has the meaning set forth in Section 6.1(a) of
Schedule C to the General Terms and Conditions    Schedule C “Health Net”    Has
the meaning set forth in the preamble to the General Terms and Conditions   
Used throughout the Agreement “Health Net 401(k) Savings Plan”    Has the
meaning set forth in Section 2(g) of Schedule E to the General Terms and
Conditions    Schedule E “Health Net Data”    Has the meaning set forth in
Section 14.1 of the General Terms and Conditions    Gen’l Terms “Health Net
Executive Sponsor”    Has the meaning set forth in Exhibit A-2 to Schedule A to
the General Terms and Conditions    Exhibit A-2 “Health Net Facility”    Has the
meaning set forth in Section 2.1(s) of the General Terms and Conditions   

Gen’l Terms

 

Schedule U    U - 14    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Health Net Federal Services” or “HNFS”    Has the meaning set forth in Section
1.1(a) of Exhibit A-6 to Schedule A to the General Terms and Conditions   

Exhibit A-6

“Health Net Indemnities”    Has the meaning set forth in Section 23.2 of the
General Terms and Conditions   

Gen’l Terms

“Health Net ITG”    Has the meaning set forth in Section 1.2(b) of Exhibit A-6
to Schedule A to the General Terms and Conditions   

Exhibit A-6

“Health Net Leased Equipment”    Has the meaning set forth in Section 11.4(a) of
the General Terms and Conditions   

Gen’l Terms

“Health Net Leased Facilities”    Has the meaning set forth in Section 11.9(a)
of the General Terms and Conditions   

Gen’l Terms

“Health Net Licensed Software”    Has the meaning set forth in Section 11.7(a)
of the General Terms and Conditions   

Gen’l Terms

“Health Net Owned Equipment”    Has the meaning set forth in Section 11.3(a) of
the General Terms and Conditions   

Gen’l Terms

“Health Net Owned Software”    Has the meaning set forth in Section 11.6(a) of
the General Terms and Conditions   

Gen’l Terms

“Health Net Non-public Data”    Has the meaning set forth in Section 14.6(a) of
the General Terms and Conditions   

Gen’l Terms

“Health Net PHI”    Has the meaning set forth in Section 2(P) of Schedule K to
the General Terms and Conditions   

Schedule K

“Health Net Project Pipeline”    Has the meaning set forth in Section 5.2(d)(v)
of Schedule C to the General Terms and Conditions   

Schedule C

“Health Net Third Party Service Contracts”    Has the meaning set forth in
Section 11.5(a) of the General Terms and Conditions   

Gen’l Terms

“Help Desk Call Deadband”    Has the meaning set forth in Section 4.3(a) of
Schedule C to the General Terms and Conditions   

Schedule C

“Help Desk Services”    Has the meaning set forth in Section 7(a) of Schedule A
to the General Terms and Conditions   

Schedule C

“Help Desk Transition Manager”    Has the meaning set forth in Exhibit A-2 to
Schedule A to the General Terms and Conditions   

Exhibit A-2

 

Schedule U    U - 15    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“High”    Has the meaning set forth in Section I of Exhibit B-3 to Schedule B to
the General Terms and Conditions   

Exhibit B-3

“HIPAA”    Has the meaning set forth in Section A of Schedule K to the General
Terms and Conditions   

Schedule K

“HIPAA Regulations”    Has the meaning set forth in Section A of Schedule K to
the General Terms and Conditions   

Schedule K

“hour” or “hours”    Has the meaning set forth in Section 3.1(b) of Schedule B
to the General Terms and Conditions   

Schedule B

“HSC”    Has the meaning set forth in Section 6.1(a) of Schedule C to the
General Terms and Conditions   

Schedule C

“HSC Equipment”    Has the meaning set forth in Section 6.1(a) of Schedule C to
the General Terms and Conditions   

Schedule C

“Human Resources Transition Manager”    Has the meaning set forth in Exhibit A-2
to Schedule A to the General Terms and Conditions   

Exhibit A-2

“HVAC”    Has the meaning set forth in Section 11.10(a) of the General Terms and
Conditions   

Gen’l Terms

“IAVA”    Has the meaning set forth in Section 2.2(j)(i) of Exhibit A-6 to
Schedule A to the General Terms and Conditions   

Exhibit A-6

“IBM”    Has the meaning set forth in the preamble to the General Terms and
Conditions   

Gen’l Terms

“IBM’s Worldwide Project Management Methodology” or “WWPMM”    Has the meaning
set forth in Exhibit A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“IMACs”    Has the meaning set forth in the Introduction to Exhibit C-9 to
Schedule C to the General Terms and Conditions   

Exhibit C-9

“Impact”    Has the meaning set forth in Section I of Exhibit B-3 to Schedule B
to the General Terms and Conditions   

Exhibit B-3

“Inbound Toll Free / Call Center Service”    Has the meaning set forth in
Section 5.11(a) of Schedule A to the General Terms and Conditions   

Schedule A

“Incident”    Has the meaning set forth in Section I of Exhibit B-3 to Schedule
B to the General Terms and Conditions   

Exhibit B-3

 

Schedule U    U - 16    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“including” (and any of its derivative forms)    Has the meaning set forth in
Section 25.10(a)(i) of the General Terms and Conditions   

Used throughout the Agreement

“Independent IP”    Has the meaning set forth in Section 15.1(b) of the General
Terms and Conditions   

Gen’l Terms

“Inflation Factor”    Has the meaning set forth in Section 8.1(b) of Schedule C
to the General Terms and Conditions   

Schedule C

“In-Flight Projects”    Has the meaning set forth in Section 13.2(c) of the
General Terms and Conditions   

Gen’l Terms

“Information Security Controls (ISeC) Document”    Has the meaning set forth in
Section 8.1(a) of Schedule A to the General Terms and Conditions   

Schedule A

“Installed MIPS”    Has the meaning set forth in Section 3.2(a) of Exhibit C-1
to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Intellectual Property Rights”    Has the meaning set forth in Section 15.1(a)
of the General Terms and Conditions   

Gen’l Terms

“Intel, UNIX, VMS, AS/400, Novel Server Transition Manager”    Has the meaning
set forth in Exhibit A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Interim Period”    Has the meaning set forth in Section 4 of Exhibit C-10 to
Schedule C to the General Terms and Conditions   

Exhibit C-10

“Inventory”    Has the meaning set forth in Section 2(a) of Exhibit C-10 to
Schedule C to the General Terms and Conditions   

Exhibit C-10

“In-Scope CTI Interfaces”    Has the meaning set forth in Section 5.1(d) of
Schedule A to the General Terms and Conditions   

Schedule A

“in writing”    Has the meaning set forth in Section 25.10(a)(iv) of the General
Terms and Conditions   

Used throughout the Agreement

“iSeries (AS/400) LPAR”    Has the meaning set forth in Section 3.4 of Exhibit
C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“ITG Infrastructure Budget”    Has the meaning set forth in Section 2(h) of
Schedule C to the General Terms and Conditions   

Schedule C

 

Schedule U    U - 17    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“IT Infrastructure”    Has the meaning set forth in Section 2.1(t) of the
General Terms and Conditions   

Gen’l Terms

“IT MRC Towers”    Has the meaning set forth in Section 4.5(a) of Schedule C to
the General Terms and Conditions   

Schedule C

“IT Towers”    Has the meaning set forth in Section 9.4(a) of the General Terms
and Conditions   

Gen’l Terms

“Joint Management Committee”    Has the meaning set forth in Section 2.5(b)(i)
of Schedule G to the General Terms and Conditions   

Schedule G

“Joint Operations Committee”    Has the meaning set forth in Section 2.5(c)(i)
of Schedule G to the General Terms and Conditions   

Schedule G

“Joint Steering Committee”    Has the meaning set forth in Section 2.5(a)(i) of
Schedule G to the General Terms and Conditions   

Schedule G

“Joint Verification Process” or “JVP”    Has the meaning set forth in Section
1(c) of Exhibit C-10 to Schedule C to the General Terms and Conditions   

Exhibit C-10

“JVP Results”    Has the meaning set forth in Section 2(b) of Exhibit C-10 to
Schedule C to the General Terms and Conditions   

Exhibit C-10

“Key Health Net Transformation Deliverables”    Has the meaning set forth in
Section 2.2 of Attachment A-3-1 to Exhibit A-3 to Schedule A to the General
Terms and Conditions   

Attachment A-3-1

“Key Supplier Positions”    Has the meaning set forth in Section 7.4(a) of the
General Terms and Conditions   

Gen’l Terms

“Knowledge Transfer Plan”    Has the meaning set forth in Section 3.6(b) of
Schedule L to the General Terms and Conditions   

Schedule L

“LAN Hard MAC”    Has the meaning set forth in Section 7.2(k) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“LAN Soft MAC”    Has the meaning set forth in Section 7.2(l) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“Laptop Workstation”    Has the meaning set forth in Section 6.3 of Exhibit C-1
to Schedule C to the General Terms and Conditions   

Exhibit C-1

 

Schedule U    U - 18    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Large Firewall”    Has the meaning set forth in Section 7.2(g) of Exhibit C-1
to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Large Router”    Has the meaning set forth in Section 7.2(c) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“Large Switch”    Has the meaning set forth in Section 7.2(f) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“Last Day of Use”    Has the meaning set forth in Section 10.2(e) of Schedule C
to the General Terms and Conditions   

Schedule C

“Law”    Has the meaning set forth in Section 2.1(u) of the General Terms and
Conditions   

Gen’l Terms

“Long Distance Services”    Has the meaning set forth in Section 5.7(a) of
Schedule A to the General Terms and Conditions   

Schedule A

“Losses”    Has the meaning set forth in Section 23.1 of the General Terms and
Conditions   

Gen’l Terms

“Lotus Notes / Active Directory Transition Manager”    Has the meaning set forth
in Exhibit A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Low”    Has the meaning set forth in Section I of Exhibit B-3 to Schedule B to
the General Terms and Conditions   

Exhibit B-3

“Mainframe and AS400 Services”    Has the meaning set forth in Section
2.1(o)(ii) of Schedule C to the General Terms and Conditions   

Schedule C

“Mainframe Gb-month”    Has the meaning set forth in Section 3.3(a) of Exhibit
C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Mainframe Transition Manager”    Has the meaning set forth in Exhibit A-2 to
Schedule A to the General Terms and Conditions   

Exhibit A-2

“Maintenance Charge”    Has the meaning set forth in Section 6.3(b) of Schedule
C to the General Terms and Conditions   

Schedule C

“Managed As Pass-Through Expense”    Has the meaning set forth in Section 9.1(a)
of the General Terms and Conditions   

Schedule S

“Managed Third Parties”    Has the meaning set forth in Section 7.8 of the
General Terms and Conditions   

Gen’l Terms

 

Schedule U    U - 19    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Measurement Period”    Has the meaning set forth in Section 2.1(f) of Schedule
B to the General Terms and Conditions   

Schedule B

“Measurements / Reports Transition Manager”    Has the meaning set forth in
Exhibit A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Medium”    Has the meaning set forth in Section I of Exhibit B-3 to Schedule B
to the General Terms and Conditions   

Exhibit B-3

“MIB”    Has the meaning set forth in Section 4.5(a)(iii) of Schedule A to the
General Terms and Conditions   

Schedule A

“may”    Has the meaning set forth in Section 25.10(a)(ii) of the General Terms
and Conditions    Used throughout the Agreement “may not”    Has the meaning set
forth in Section 25.10(a)(ii) of the General Terms and Conditions    Used
throughout the Agreement “Medium Router”    Has the meaning set forth in Section
7.2(b) of Exhibit C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Medium Switch”    Has the meaning set forth in Section 7.2(e) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“Mental Impressions”    Has the meaning set forth in Section 15.6(a) of the
General Terms and Conditions   

Gen’l Terms

“MER”    Has the meaning set forth in Exhibit A-13 to Schedule A to the General
Terms and Conditions   

Exhibit A-13

“MHS”    Has the meaning set forth in Section 2.1(c)(vii) of Exhibit A-6 to
Schedule A to the General Terms and Conditions   

Exhibit A-6

“Middleware”    Has the meaning set forth in Section 3.11(a) of Schedule A to
the General Terms and Conditions   

Schedule A

“Middleware Infrastructure Available for Use”    Has the meaning set forth in
Section 2.5(b)(i) of Exhibit B-2 to Schedule B to the General Terms and
Conditions   

Exhibit B-2

“Middleware Infrastructure Availability”    Has the meaning set forth in Section
2.5(a) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Middleware Infrastructure Downtime”    Has the meaning set forth in Section
2.5(b)(ii) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

 

Schedule U    U - 20    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Middleware Infrastructure Downtime”    Has the meaning set forth in Section
2.5(b)(ii) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Middleware Infrastructure Maintenance Window”    Has the meaning set forth in
Section 2.5(b)(iii) of Exhibit B-2 to Schedule B to the General Terms and
Conditions   

Exhibit B-2

“Middleware Infrastructure Scheduled Uptime”    Has the meaning set forth in
Section 2.5(b)(iv) of Exhibit B-2 to Schedule B to the General Terms and
Conditions   

Exhibit B-2

“Milestones”    Has the meaning set forth in Section 1.2(b)(iii) of Exhibit A-10
to Schedule A of the General Terms and Conditions   

Exhibit A-10

“Minimum Commitment”    Has the meaning set forth in Section 4.5(a) of Schedule
C to the General Terms and Conditions   

Schedule C

“Monthly Performance Report”    Has the meaning set forth in Section 17.3(b) of
the General Terms and Conditions   

Schedule B

“NAS Available for Use”    Has the meaning set forth in Section 2.7(b)(i) of
Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“NAS Availability”    Has the meaning set forth in Section 2.7(a) of Exhibit B-2
to Schedule B to the General Terms and Conditions   

Exhibit B-2

“NAS Downtime”    Has the meaning set forth in Section 2.7(b)(ii) of Exhibit B-2
to Schedule B to the General Terms and Conditions   

Exhibit B-2

“NAS Maintenance Window”    Has the meaning set forth in Section 2.7(b)(iii) of
Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“NAS Scheduled Uptime”    Has the meaning set forth in Section 2.7(b)(iv) of
Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Net Sales Proceeds”    Has the meaning set forth in Section 10.2(a)(iii) of
Schedule C to the General Terms and Conditions   

Schedule C

“Network Baseline”    Has the meaning set forth in Section 5.3(a) of Exhibit
C-10 to Schedule C to the General Terms and Conditions   

Exhibit C-10

“Network MRC Towers”    Has the meaning set forth in Section 4.5(a) of Schedule
C to the General Terms and Conditions   

Schedule C

 

Schedule U    U - 21    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Network RU Deadband”    Has the meaning set forth in Section 5.3(b)(i) of
Exhibit C-10 to Schedule C to the General Terms and Conditions   

Exhibit C-10

“Network Towers”    Has the meaning set forth in Section 9.4(a) of the General
Terms and Conditions   

Gen’l Terms

“New Services”    Has the meaning set forth in Section 3.8(a) of the General
Terms and Conditions   

Gen’l Terms

“New Work”    Has the meaning set forth in Section 15.1(c) of the General Terms
and Conditions   

Gen’l Terms

“Newly Discovered Contract”    Has the meaning set forth in Section 3.1 of
Exhibit C-10 to Schedule C to the General Terms and Conditions   

Exhibit C-10

“Network Transition Deadband”    Has the meaning set forth in Section 3.2(b) of
Schedule C to the General Terms and Conditions   

Schedule C

“Network Transition Manager”    Has the meaning set forth in Exhibit A-2 to
Schedule A to the General Terms and Conditions   

Exhibit A-2

“Non-Commercially Available”    Has the meaning set forth in Section 2.1(v) of
the General Terms and Conditions   

Gen’l Terms

“Non-Production Server Available for Use”    Has the meaning set forth in
Section 2.4(b)(i) of Exhibit B-2 to Schedule B to the General Terms and
Conditions   

Exhibit B-2

“Non-Production Server Availability”    Has the meaning set forth in Section
2.4(a) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Non-Production Server Downtime”    Has the meaning set forth in Section
2.4(b)(ii) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Non-Production Server Maintenance Window”    Has the meaning set forth in
Section 2.4(b)(iii) of Exhibit B-2 to Schedule B to the General Terms and
Conditions   

Exhibit B-2

“Non-Production Server Scheduled Uptime”    Has the meaning set forth in Section
2.4(b)(iv) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Normalization Objection Period”    Has the meaning set forth in Section
9.4(d)(v) of the General Terms and Conditions   

Gen’l Terms

 

Schedule U    U - 22    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Notice of Election”    Has the meaning set forth in Section 23.5(a) of the
General Terms and Conditions   

Gen’l Terms

“Novell Server”    Has the meaning set forth in Section 4.7 of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“Open Source Code”    Has the meaning set forth in Section 19.8(a)(iv) of the
General Terms and Conditions   

Gen’l Terms

“Online Directory Services”    Has the meaning set forth in Section 5.9(a) of
Schedule A to the General Terms and Conditions   

Schedule A

“Onshore Support Model”    Has the meaning set forth in Section 8.3 of Schedule
C to the General Terms and Conditions   

Schedule C

“On-Site Health Net Resources”    Has the meaning set forth in Section 11.12(a)
of the General Terms and Conditions   

Gen’l Terms

“On-Time Completion”    Has the meaning set forth in Section 1.2 of Exhibit B-1
to Schedule B to the General Terms and Conditions   

Exhibit B-1

“Operational Deliverable”    Has the meaning set forth in Section 4(a) of Annex
A-10-1 to Exhibit A-10 to Schedule A of the General Terms and Conditions   

Annex A-10-1

“Operations and Maintenance Services” or “O&M Services”    Has the meaning set
forth in Section 2 of Schedule A to the General Terms and Conditions   

Schedule A

“Operations Transitions Manager” or “OTM”    Has the meaning set forth in
Exhibit A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Out-of-Pocket Expenses”    Has the meaning set forth in Section 2.1(w) of the
General Terms and Conditions   

Gen’l Terms

“Overall Transition Manager”    Has the meaning set forth in Exhibit A-2 to
Schedule A to the General Terms and Conditions   

Exhibit A-2

“Parent”    With respect to an entity, any other entity or person Controlling
such entity.   

Gen’l Terms

“Participant”    Has the meaning set forth in Section 4.5(b) of Schedule E to
the General Terms and Conditions   

Schedule E

“Parties”    Has the meaning set forth in the preamble to the General Terms and
Conditions   

Gen’l Terms

 

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Party”    Has the meaning set forth in the preamble to the General Terms and
Conditions   

Gen’l Terms

“Payable Date”    Has the meaning set forth in Section 10.2 of the General Terms
and Conditions   

Gen’l Terms

“PBX VM Mailbox”    Has the meaning set forth in Section 7.3(d) of Exhibit C-1
to Schedule C to the General Terms and Conditions   

Exhibit C-1

“PCR”    Has the meaning set forth in Section 2(b) of Exhibit A-10 to Schedule A
of the General Terms and Conditions   

Exhibit A-10

“PDA”    Has the meaning set forth in Section 6.7(a) of Exhibit C-1 to Schedule
C to the General Terms and Conditions   

Exhibit C-1

“PDLC”    Has the meaning set forth in Section 2(a)(i) of Exhibit A-10 to
Schedule A of the General Terms and Conditions   

Exhibit A-10

“Periodic Events”    Has the meaning set forth in Section 6.10(b) of Schedule A
to the General Terms and Conditions   

Schedule A

“Phase Out Assets”    Has the meaning set forth in Section 3(a) of Schedule S to
the General Terms and Conditions   

Schedule S

“PHI”    Has the meaning set forth in Section A of Schedule K to the General
Terms and Conditions   

Schedule K

“POA&M”    Has the meaning set forth in Section 2.2(j)(iv)(A) of Exhibit A-6 to
Schedule A to the General Terms and Conditions   

Exhibit A-6

“POC”    Has the meaning set forth in Section 2.2(d)(i) of Exhibit A-6 to
Schedule A to the General Terms and Conditions   

Exhibit A-6

“Pool Percentage Available for Allocation”    Has the meaning set forth in
Section 2.1(g) of Schedule B to the General Terms and Conditions   

Schedule B

“Priority”    Has the meaning set forth in Section I of Exhibit B-3 to Schedule
B to the General Terms and Conditions and Exhibit B-5 to Schedule B to the
General Terms and Conditions    Exhibit B-3 Exhibit B-5

 

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Problem”    Has the meaning set forth in Section II of Exhibit B-3 to Schedule
B to the General Terms and Conditions   

Exhibit B-3

“Problem / Change Transition Manager”    Has the meaning set forth in Exhibit
A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Procedures Manual”    Has the meaning set forth in Section 17.4(a) of the
General Terms and Conditions   

Gen’l Terms

“Process Transition Manager”    Has the meaning set forth in Exhibit A-2 to
Schedule A to the General Terms and Conditions   

Exhibit A-2

“Procurement Transition Manager”    Has the meaning set forth in Exhibit A-2 to
Schedule A to the General Terms and Conditions   

Exhibit A-2

“Production Applications Available for Use”    Has the meaning set forth in
Section 2.6(b)(i) of Exhibit B-2 to Schedule B to the General Terms and
Conditions   

Exhibit B-2

“Production Applications Availability”    Has the meaning set forth in Section
2.6(a) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Production Applications Downtime”    Has the meaning set forth in Section
2.6(b)(ii) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Production Applications Maintenance Window”    Has the meaning set forth in
Section 2.6(b)(iii) of Exhibit B-2 to Schedule B to the General Terms and
Conditions   

Exhibit B-2

“Production Applications Scheduled Uptime”    Has the meaning set forth in
Section 2.6(b)(iv) of Exhibit B-2 to Schedule B to the General Terms and
Conditions   

Exhibit B-2

“Program Manager”    Has the meaning set forth in Section 8.1(a) of the General
Terms and Conditions   

Schedule G

“Project”    Has the meaning set forth in Section 5.1(a) of Schedule C to the
General Terms and Conditions   

Schedule C

“Project Brief”    Has the meaning set forth in Section 1.1(a) of Exhibit A-10
to Schedule A of the General Terms and Conditions   

Exhibit A-10

“Project Charges”    Has the meaning set forth in Section 2(i) of Schedule C to
the General Terms and Conditions   

Schedule C

 

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Project Estimate”    Has the meaning set forth in Section 1.1(b) of Exhibit
A-10 to Schedule A of the General Terms and Conditions   

Exhibit A-10

“Project Hour”    Has the meaning set forth in Section 5.1(b) of Schedule C to
the General Terms and Conditions   

Schedule C

“Project Manager”    Has the meaning set forth in Section 1.2(b)(viii) of
Exhibit A-10 to Schedule A to the General Terms and Conditions   

Exhibit A-10

“PT”    Has the meaning set forth in Section 3.1(b) of Schedule B to the General
Terms and Conditions   

Schedule B

“PTO”    Has the meaning set forth in Section 4.3 of Schedule E to the General
Terms and Conditions   

Schedule E

“Purchasable Items”    Has the meaning set forth in 2.25(a) of Schedule A to the
General Terms and Conditions   

Schedule E

“Purchased Assets”    Has the meaning set forth in the introductory section of
Schedule T to the General Terms and Conditions   

Schedule T

“Purchased Assets Price”    Has the meaning set forth in the introductory
section of Schedule T to the General Terms and Conditions   

Schedule T

“Pure Pass-Through Expense”    Has the meaning set forth in Section 9.1(b) of
the General Terms and Conditions   

Schedule S

“Raised (Access) Floor”    Has the meaning set forth in Exhibit A-13 to Schedule
A to the General Terms and Conditions   

Exhibit A-13

“Rancho Data Center”    Has the meaning set forth in Section 13.5(c)(i) of the
General Terms and Conditions   

Gen’l Terms

“Rancho Service Cessation Obligation”    Has the meaning set forth in Section
13.5(c)(i) of the General Terms and Conditions   

Gen’l Terms

“Rancho Vacate Obligation”    Has the meaning set forth in Section 13.5(c)(ii)
of the General Terms and Conditions   

Gen’l Terms

“RCA”    Has the meaning set forth in Section 2.6(b) of Schedule A   

Schedule A

“RM”    Has the meaning set forth in Section 2.17(c) of Schedule A to the
General Terms and Conditions   

Schedule A

“Receiving Party”    Has the meaning set forth in Section 21.1(a) of the General
Terms and Conditions   

Gen’l Terms

 

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Defined Term

  

Meaning

  

Primary Use Location

“Recovery Environment”    Has the meaning set forth in Section 4.1(c) of
Schedule B to the General Terms and Conditions   

Schedule B

“Refresh”    Has the meaning set forth in Section 2.20(a)(ii) of Schedule A to
the General Terms and Conditions   

Schedule A

“Regulated Contracts”    Has the meaning set forth in Exhibit A-3 to Schedule A
to the General Terms and Conditions   

Exhibit A-3

“Regulatory Change”    Has the meaning set forth in Section 27.5(b) of the
General Terms and Conditions   

Gen’l Terms

“Remaining HSC Expenditures”    Has the meaning set forth in Section 6.5(a)(ii)
of Schedule C to the General Terms and Conditions   

Schedule C

“Remote Access Available for Use”    Has the meaning set forth in Section
2.1(b)(i) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Remote Access Availability”    Has the meaning set forth in Section 2.1(a) of
Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Remote Access Downtime”    Has the meaning set forth in Section 2.1(b)(ii) of
Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Remote Access Maintenance Window”    Has the meaning set forth in Section
2.1(b)(iii) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Remote Access Scheduled Uptime”    Has the meaning set forth in Section
2.1(b)(iv) of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Remote Site MAC”    Has the meaning set forth in Section 7.2(o) of Exhibit C-1
to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Replacement”    Has the meaning set forth in Section 2(c) to Exhibit C-9 to
Schedule C to the General Terms and Conditions   

Exhibit C-9

“Representative Sample”    Has the meaning set forth in Section 9.4(e)(i) of the
General Terms and Conditions   

Gen’l Terms

“Required Consents”    Has the meaning set forth in Section 2.1(x) of the
General Terms and Conditions   

Gen’l Terms

“Resources”    Has the meaning set forth in Section 2.1(a)(i) of Schedule L to
the General Terms and Conditions   

Schedule L

 

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Resource Baseline”    Has the meaning set forth in Section 4.1(a) of Schedule C
to the General Terms and Conditions   

Schedule C

“Resource Category”    Has the meaning set forth in Section 2.1(l) of Schedule C
to the General Terms and Conditions   

Schedule C

“Resource Unit”    Has the meaning set forth in Section 2.1(m) of Schedule C to
the General Terms and Conditions   

Schedule C

“Retained”    Has the meaning set forth in Footnote 3 of Schedule S to the
General Terms and Conditions   

Schedule S

“Re-Transfer”    Has the meaning set forth in Section 6.3(a) of Schedule E to
the General Terms and Conditions   

Schedule E

“Re-Transfer Date”    Has the meaning set forth in Section 6.3(a) of Schedule E
to the General Terms and Conditions   

Schedule E

“Re-Transfer Employee”    Has the meaning set forth in Section 6.3(a) of
Schedule E to the General Terms and Conditions   

Schedule E

“Review Period”    Has the meaning set forth in Section 9.4(f) of the General
Terms and Conditions   

Gen’l Terms

“RM”    Has the meaning set forth in Section 2.17(c) of Schedule A to the
General Terms and Conditions   

Schedule A

“RPO”    Has the meaning set forth in 2.22(e)(ii)(B) of Schedule A to the
General Terms and Conditions   

Schedule A

“RRCs”    Has the meaning set forth in Section 1 of Schedule C to the General
Terms and Conditions   

Schedule C

“RTO”    Has the meaning set forth in 2.22(e)(ii)(A) of Schedule A to the
General Terms and Conditions   

Schedule A

“RU”    Has the meaning set forth in Section 2(m) of Schedule C to the General
Terms and Conditions   

Schedule C

“Sale Effective Date”    Has the meaning set forth in the introductory paragraph
of Schedule T to the General Terms and Conditions   

Schedule T

“SAN Availability”    Has the meaning set forth in Section 1.4(a) of Exhibit B-2
to Schedule B to the General Terms and Conditions   

Exhibit B-2

“SAN Available for Use”    Has the meaning set forth in Section 1.4(b)(i) of
Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

 

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“SAN Downtime”    Has the meaning set forth in Section 1.4(b)(ii) of Exhibit B-2
to Schedule B to the General Terms and Conditions   

Exhibit B-2

“SAN Maintenance Window”    Has the meaning set forth in Section 1.4(b)(iii) of
Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“SAN Scheduled Uptime”    Has the meaning set forth in Section 1.4(b) (iv) of
Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“SAN/NAS Gb-month”    Has the meaning set forth in Section 4.6 of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“SAN Storage Deadband”    Has the meaning set forth in Section 4.3(d) of
Schedule C to the General Terms and Conditions   

Schedule C

“SAS 70 Audit”    Has the meaning set forth in Section 18.5(a) of the General
Terms and Conditions   

Gen’l Terms

“SEC”    Has the meaning set forth in Section 21.2(d) of the General Terms and
Conditions.   

Gen’l Terms

“Scheduled Maintenance”    Has the meaning set forth in Section 2.1(h) of
Schedule B to the General Terms and Conditions   

Schedule Bik

“Security Transition Manager”    Has the meaning set forth in Exhibit A-2 to
Schedule A to the General Terms and Conditions   

Exhibit A-2

“Self Help Tools”    Has the meaning set forth in Section 7.9 of Schedule A to
the General Terms and Conditions   

Schedule A

“Server Consolidation Project”    Has the meaning set forth in Section 7 of
Exhibit C-10 to Schedule C to the General Terms and Conditions   

Exhibit C-10

“Server Image Deadband”    Has the meaning set forth in Section 5.2(b)(i) of
Exhibit C-10 to Schedule C to the General Terms and Conditions   

Exhibit C-10

“Server Services”    Has the meaning set forth in Section 2.1(o)(iii) of
Schedule C to the General Terms and Conditions   

Schedule C

“Service Commencement Date”    Has the meaning set forth in Section 2.1(y) of
the General Terms and Conditions   

Gen’l Terms

 

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Service Level Credit” (or “SLC”)    Has the meaning set forth in Section 4.3(b)
of Schedule B to the General Terms and Conditions   

Schedule B

“Service Level Failure”    Has the meaning set forth in Section 2.1(k) of
Schedule B to the General Terms and Conditions   

Schedule B

“Service Level Improvement Date”    Has the meaning set forth in Section 5.4 of
Schedule B to the General Terms and Conditions   

Schedule B

“Service Levels”    Has the meaning set forth in Section 6.1 of the General
Terms and Conditions   

Schedule B

“Service Recipient”    Has the meaning set forth in Section 3.5(a) of the
General Terms and Conditions   

Gen’l Terms

“Service Recipient Damages”    Has the meaning set forth in Section 24.2(d) of
the General Terms and Conditions   

Gen’l Terms

“Service Tower”    Has the meaning set forth in Section 2.1(o) of Schedule C to
the General Terms and Conditions   

Schedule C

“Services”    Has the meaning set forth in Section 3.2 of the General Terms and
Conditions   

Gen’l Terms

“Services Solution”    Has the meaning set forth in Section 1.6(a) of Schedule A
to the General Terms and Conditions   

Schedule A

“shall”    Has the meaning set forth in Section 25.10(a)(iii) of the General
Terms and Conditions    Used throughout the Agreement “Small Project”    Has the
meaning set forth in Section 5.1(c) of Schedule C to the General Terms and
Conditions   

Schedule C

“Small Project Hours Cap”    Has the meaning set forth in Section 5.1(c) to
Schedule C to the General Terms and Conditions   

Schedule C

“Small Router”    Has the meaning set forth in Section 7.2(a) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“Small Switch”    Has the meaning set forth in Section 7.2(d) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“Soft MAC-ACD”    Has the meaning set forth in Section 7.3(g) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“Soft MAC – PBX”    Has the meaning set forth in Section 7.3(h) of Exhibit C-1
to Schedule C to the General Terms and Conditions   

Exhibit C-1

 

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Soft MAC - Voicemail”    Has the meaning set forth in Section 7.3(i) of Exhibit
C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Software    Has the meaning set forth in Section 2.1(aa) of the General Terms
and Conditions   

Gen’l Terms

“Software Distribution Transition Manager”    Has the meaning set forth in
Exhibit A-2 to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Source Code”    Has the meaning set forth in Section 2.1(bb) of the General
Terms and Conditions   

Gen’l Terms

“SPOC”    Has the meaning set forth in Section 7.2(a)(i) of Schedule A to the
General Terms and Conditions   

Schedule A

“SSO Transition Manager”    Has the meaning set forth in Exhibit A-2 to Schedule
A to the General Terms and Conditions   

Exhibit A-2

“Standard”    Has the meaning set forth in 6.4(b) of Schedule A to the General
Terms and Conditions   

Schedule A

“Standard HSC Costs”    Has the meaning set forth in Section 6.5(a)(i) of
Schedule C to the General Terms and Conditions   

Schedule C

“Standard UNIX Image”    Has the meaning set forth in Section 4.4(a)(i) of
Exhibit C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Standard Voice PBX Port”    Has the meaning set forth in Section 7.3(a) of
Exhibit C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Standard VoIP Port”    Has the meaning set forth in Section 7.3(b) of Exhibit
C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Standard Wintel Image”    Has the meaning set forth in Section 4.3(a)(i) of
Exhibit C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Stranded HSC Costs”    Has the meaning set forth in Section 6.5(a)(i) of
Schedule C to the General Terms and Conditions   

Schedule C

“Subcontractor”    Has the meaning set forth in Section 7.7 of the General Terms
and Conditions   

Gen’l Terms

 

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Substitute Services”    Has the meaning set forth in Section 8.8 of Schedule C
to the General Terms and Conditions   

Schedule C

“Successor Supplier”    Has the meaning set forth in Section 2(l) of Schedule E
to the General Terms and Conditions   

Schedule E

“Supplier”    Has the meaning set forth in the preamble to the General Terms and
Conditions    Used throughout the Agreement “Supplier 401(k) Plan”    Has the
meaning set forth in Section 4.5(a) of Schedule E to the General Terms and
Conditions   

Schedule E

“Supplier’s actual performance”    Has the meaning set forth in Section 5.4 of
Schedule B to the General Terms and Conditions   

Schedule B

“Supplier Disengagement Assistance Lead”    Has the meaning set forth in Section
3.2 of Schedule L to the General Terms and Conditions   

Schedule L

“Supplier Facilities”    Has the meaning set forth in Section 5.2(a) of the
General Terms and Conditions   

Gen’l Terms

“Supplier Indemnities”    Has the meaning set forth in Section 23.4 of the
General Terms and Conditions   

Gen’l Terms

“Supplier Non-Personnel Resource Obligations”    Has the meaning set forth in
Section 2.1(b)(iv) of Schedule L to the General Terms and Conditions   

Schedule L

“Supplier PE”    Has the meaning set forth in Section 17.1(a) of the General
Terms and Conditions   

Gen’l Terms

“Supplier Personnel”    Has the meaning set forth in Section 2.1(dd) of the
General Terms and Conditions   

Gen’l Terms

“Supplier Proprietary Delivery Tool”    Has the meaning set forth in Section
12.7(b)(ii)(D) of the General Terms and Conditions   

Gen’l Terms

“Supplier’s Actual Performance”    Has the meaning set forth in Section 5.4 of
Schedule B to the General Terms and Conditions   

Schedule B

“Supplier Software”    Has the meaning set forth in Section 2.1(ee) of the
General Terms and Conditions   

Gen’l Terms

“Swap Rate/Initial Index Rate    Has the meaning set forth in Section 6.3(c)(ii)
of Schedule C to the General Terms and Conditions   

Schedule C

“System Image”    Has the meaning set forth in Section 4.2(a) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

 

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Systems Change”    Has the meaning set forth in Section 12 of Schedule C to the
General Terms and Conditions   

Schedule C

“Systems Software”    Has the meaning set forth in Section 2.1(cc) of the
General Terms and Conditions   

Gen’l Terms

“T&M Rates”    Has the meaning set forth in Section 7.3 of Schedule C to the
General Terms and Conditions   

Schedule C

“Tape Operations Transition Manager”    Has the meaning set forth in Exhibit A-2
to Schedule A to the General Terms and Conditions   

Exhibit A-2

“Targeted Cost Increases”    Has the meaning set forth in Section 8.4(c)(iv) of
Schedule C to the General Terms and Conditions   

Schedule C

“Targeted Cost Reductions”    Has the meaning set forth in Section 8.4(c)(ii) of
Schedule C to the General Terms and Conditions   

Schedule C

“Targeted Resource Additions”    Has the meaning set forth in Section
8.4(c)(iii) of Schedule C to the General Terms and Conditions   

Schedule C

“Targeted Resource Reductions”    Has the meaning set forth in Section 8.4(c)(i)
of Schedule C to the General Terms and Conditions   

Schedule C

“TBCP”    Has the meaning set forth in 2.23(a) of Schedule A to the General
Terms and Conditions   

Schedule A

“Solution Description”    Has the meaning set forth in Section 1.4(a) of
Schedule A to the General Terms and Conditions   

Schedule A

“Technology Plan”    Has the meaning set forth in Section 17.6 of the General
Terms and Conditions   

Gen’l Terms

“Teleconferencing Service”    Has the meaning set forth in Section 5.10(a) of
Schedule A to the General Terms and Conditions   

Schedule A

“Term”    Has the meaning set forth in Section 4.1 of the General Terms and
Conditions   

Gen’l Terms

“Termination Fees”    Has the meaning set forth in Section 1 of Exhibit C-8 to
Schedule C to the General Terms and Conditions   

Exhibit C-8

“Third Party Costs”    Has the meaning set forth in Section 10.2(a)(i) of
Schedule C to the General Terms and Conditions   

Schedule C

“***Critical Service Levels”    Has the meaning set forth in Section 16.1(c) of
the General Terms and Conditions   

Gen’l Terms

 

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Transfer Date”    Has the meaning set forth in Section 2(n) of Schedule E to
the General Terms and Conditions   

Schedule E

“Transformation”    Has the meaning set forth in Section 13.1 of the General
Terms and Conditions   

Schedule A

“Transformation Charges”    Has the meaning set forth in Section 3.3(a) of
Schedule C to the General Terms and Conditions   

Schedule C

“Transformation Plan”    Has the meaning set forth in Section 13.2(b) of the
General Terms and Conditions   

Gen’l Terms

“Transition”    Has the meaning set forth in Section 13.1 of the General Terms
and Conditions   

Schedule E

“Transition Architect”    Has the meaning set forth in Exhibit A-2 to Schedule A
to the General Terms and Conditions   

Exhibit A-2

“Transition Engineer”    Has the meaning set forth in Exhibit A-2 to Schedule A
to the General Terms and Conditions   

Exhibit A-2

“Transition Period ASC”    Has the meaning set forth in Section 2.1(r) of
Schedule C to the General Terms and Conditions   

Schedule C

“Transition Plan”    Has the meaning set forth in Section 13.2(b) of the General
Terms and Conditions   

Gen’l Terms

“Transitioned Employee”    Has the meaning set forth in Section 2(o) of Schedule
E to the General Terms and Conditions   

Schedule E

“Transport Resource Categories”    Has the meaning set forth in Section 7.4(a)
of Exhibit C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“TRICARE Program”    Has the meaning set forth in Section 1.1(a)(i) of Exhibit
A-6 to Schedule A to the General Terms and Conditions   

Exhibit A-6

“TSM Environment”    Has the meaning set forth in Row 6 of Table 23 of Schedule
A to the General Terms and Conditions   

Schedule A

“Update Letter”    Has the meaning set forth in Section 18.5(c)(i) of the
General Terms and Conditions   

Gen’l Terms

“UPS”    Has the meaning set forth in Section 11.10(a) of the General Terms and
Conditions   

Gen’l Terms

“Unidentified Asset”    Has the meaning set forth in Section 2.8(a) of Schedule
L to the General Terms and Conditions   

Schedule L

 

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“UNIX Server”    Has the meaning set forth in Section 4.2(b) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“UNIX System Images”    Has the meaning set forth in Section 5.2(a)(ii) of
Exhibit C-10 to Schedule C to the General Terms and Conditions   

Exhibit C-10

“Urgency”    Has the meaning set forth in Section I of Exhibit B-3 to Schedule B
to the General Terms and Conditions   

Exhibit B-3

“Use”    Has the meaning set forth in Section 2.1(ff) of the General Terms and
Conditions   

Gen’l Terms

“Utilization Basis”    Has the meaning set forth in Section 13 of Schedule C to
the General Terms and Conditions   

Schedule C

“VA”    Has the meaning set forth in Section 1.1(a)(ii) of Exhibit A-6 to
Schedule A to the General Terms and Conditions   

Exhibit A-6

“VAMC”    Has the meaning set forth in Section 1.1(a)(ii)(A) of Exhibit A-6 to
Schedule A to the General Terms and Conditions   

Exhibit A-6

“Variable Charge Invoice”    Has the meaning set forth in Section 10.1(a) of the
General Terms and Conditions   

Gen’l Terms

“Video Conference Services”    Has the meaning set forth in Section 5.14(a) of
Schedule A to the General Terms and Conditions   

Schedule A

“VIP    Has the meaning set forth in Section 6.10(a) of Schedule A to the
General Terms and Conditions   

Schedule A

“VIP Workstation”    Has the meaning set forth in Section 6.4 of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“Virtualized UNIX Image”    Has the meaning set forth in Section 4.4(a)(ii) of
Exhibit C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Virtualized Wintel Image”    Has the meaning set forth in Section 4.3(a)(ii) of
Exhibit C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“Virus”    Has the meaning set forth in Section 19.9 of the General Terms and
Conditions   

Gen’l Terms

 

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“VISN”    Has the meaning set forth in Section 1.1(a)(ii)(A) of Exhibit A-6 to
Schedule A to the General Terms and Conditions   

Exhibit A-6

“VMS Alpha Image”    Has the meaning set forth in Section 4.8(a) of Exhibit C-1
to Schedule C to the General Terms and Conditions   

Exhibit C-1

“VMS Image”    Has the meaning set forth in Section 4.8 of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“VMS Itanium Image”    Has the meaning set forth in Section 4.8(b) of Exhibit
C-1 to Schedule C to the General Terms and Conditions   

Exhibit C-1

“VMS System Image”    Has the meaning set forth in Section 5.2(a)(iii) of
Exhibit C-10 to Schedule C to the General Terms and Conditions   

Exhibit C-10

“Virus”    Software code that is: (i) program code or programming instruction(s)
or set(s) of instructions intentionally designed to disrupt, disable, harm,
interfere with or otherwise adversely affect computer programs, data files or
operations (excluding software keys); or (ii) other code typically described as
a virus, Trojan horse, worm, back door or other type of harmful code.   

Gen’l Terms

“Voice Available For Use”    Has the meaning set forth in Section 2.2(b)(i) of
Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Voice Availability”    Has the meaning set forth in Section 2.2(a) of Exhibit
B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Voice Downtime”    Has the meaning set forth in Section 2.2(b)(ii) of Exhibit
B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Voice Mail Services”    Has the meaning set forth in Section 5.8(a) of Schedule
A to the General Terms and Conditions   

Schedule A

“Voice Maintenance Window”    Has the meaning set forth in Section 2.2(b)(iii)
of Exhibit B-2 to Schedule B to the General Terms and Conditions   

Exhibit B-2

“Voice MACs”    Has the meaning set forth in the Introduction to Exhibit C-9 to
Schedule C to the General Terms and Conditions   

Exhibit C-9

 

Schedule U    U - 36    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Voice Network”    Has the meaning set forth in Section 5(b) of Schedule A to
the General Terms and Conditions   

Schedule A

“Voice Network Services”    Has the meaning set forth in Section 5(a) of
Schedule A to the General Terms and Conditions   

Schedule C

“VPN User”    Has the meaning set forth in Section 7.2(h) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“WAN Hard MAC”    Has the meaning set forth in Section 7.2(i) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“WAN Soft MAC”    Has the meaning set forth in Section 7.2(j) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“WARN”    Has the meaning set forth in Section 5.3 of Schedule E to the General
Terms and Conditions   

Schedule E

“Weighting Factor”    Has the meaning set forth in Section 2.1(l) of Schedule B
to the General Terms and Conditions   

Schedule B

“will”    Has the meaning set forth in Section 25.10(a)(iii) of the General
Terms and Conditions    Used throughout the Agreement “Wind Down Costs”    Has
the meaning set forth in Section 10.2(a) of Schedule C to the General Terms and
Conditions   

Schedule C

“Wintel Consolidation Cap”    Has the meaning set forth in Section 7 of Exhibit
C-10 to Schedule C to the General Terms and Conditions   

Exhibit C-10

“Wintel Server”    Has the meaning set forth in Section 4.2(c) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“Wintel System Images”    Has the meaning set forth in Section 5.2(a)(i) of
Exhibit C-10 to Schedule C to the General Terms and Conditions   

Exhibit C-10

“Wintel System Image Deadband”    Has the meaning set forth in Section 4.3(e) of
Schedule C to the General Terms and Conditions   

Schedule C

“Work Order”    Has the meaning set forth in Section 1.2(a) of Exhibit A-10 to
Schedule A of the General Terms and Conditions   

Exhibit A-10

 

Schedule U    U - 37    Health Net / IBM Confidential

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Final Execution Version

 

Defined Term

  

Meaning

  

Primary Use Location

“Working Paper Employee”    Has the meaning set forth in Section 5.2(a) of
Schedule E to the General Terms and Conditions   

Schedule E

“Working Paper Employment Costs”    Has the meaning set forth in Section 5.2(c)
of Schedule E to the General Terms and Conditions   

Schedule E

“Work Product”    Has the meaning set forth in Section 15.1(c) of the General
Terms and Conditions   

Gen’l Terms

“Workstations”    Has the meaning set forth in Section 6.1(a) of Exhibit C-1 to
Schedule C to the General Terms and Conditions   

Exhibit C-1

“written”    Has the meaning set forth in Section 25.10(a)(iv) of the General
Terms and Conditions    Used throughout the Agreement “Written Deliverables”   
Has the meaning set forth in Section 3(a) of Annex A-10-1 to Exhibit A-10 to
Schedule A of the General Terms and Conditions   

Annex A-10-1

 

Schedule U    U - 38    Health Net / IBM Confidential

--------------------------------------------------------------------------------

 

SCHEDULE V

SUPPLIER COMPETITORS

***

 

Schedule V    V - 1    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

SCHEDULE W

REPORTS

 

Schedule W    W - 1    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

SCHEDULE W

REPORTS

Without limiting Supplier’s obligations and Health Net’s rights set forth
elsewhere in the Agreement (including Section 17.3 of the General Terms and
Conditions), this Schedule W lists certain reports that Supplier shall create
and provide to Health Net as of the Effective Date. In addition to those reports
listed in this Schedule W, as reasonably requested by Health Net, Supplier shall
also provide Health Net with ad hoc reports. Any requests for ad hoc reports
falling outside of this scope shall be provided by IBM using hours from the
Project Pool.

 

Helpdesk    IVR Self Service Novell Password Reset report    This report details
the volume of calls for password resets that were successful or unsuccessful.   
Monthly, Quarterly, Annually    Current Media HN generates today. Helpdesk   
MC400 Self Service Password Reset report    This report details the volume of
calls for password resets that were successful or unsuccessful.    Monthly,
Quarterly, Annually    Current Media HN generates today. Assumed VRU automation
Assets    Hardware and Software Assets    This report includes all Health Net
hardware and software assets.    Quarterly    Altitis will be customized to
generate these reports if they do not exist today. Assume all of this data is
captured today and will be captured when IBM takes over Assets    Active
Hardware Assets    This report provides information with respect to all active
hardware assets available for the customer in the asset data repository.   
Scheduled, On Demand.    GSMRT Tool/Print hardcopy as needed by recipient

 

Schedule W    W - 2    Health Net / IBM Confidential

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Final Execution Version

 

Assets    Inactive Hardware Assets    This report provides information with
respect to all inactive hardware assets available for the customer in the asset
data repository.    Scheduled, On Demand.    GSMRT Tool/Print hardcopy as needed
by recipient Assets    Daily Asset Count    This report shows the count of
active assets by category and subcategory.    Scheduled, On Demand.   
GSMRT Tool/Print hardcopy as needed by recipient Assets    Hardware Seat Count
   This report is a summary of account billable categories and subcategories,
followed by detail corresponding to the summary.    Scheduled, On Demand.   
GSMRT Tool/Print hardcopy as needed by recipient Assets   
Disposed/Decommissioned Hardware Assets    This report provides information with
respect to all disposed /decommissioned hardware assets for the customer in the
asset data repository.    Scheduled, On Demand.    GSMRT Tool/Print hardcopy as
needed by recipient Assets    Newly Added Active Hardware Assets – Prior Month
   This report provides information with respect to all active hardware assets
added to the asset data repository in the prior month.    Scheduled, On Demand.
   GSMRT Tool/Print hardcopy as needed by recipient Assets    Changes to
Customer Bill    This report provides information with respect to all changes to
a customer bill.    Scheduled, On Demand.    GSMRT Tool/Print hardcopy as needed
by recipient Assets    Duplicate Serial Number –Physical    This report provides
information with respect to duplicate entries.    Scheduled, On Demand.    GSMRT
Tool/Print hardcopy as needed by recipient Assets    Duplicate Serial Number –
Financial    This report provides information with respect to duplicate serial
numbers on the same asset    Scheduled, On Demand.    GSMRT Tool/Print hardcopy
as needed by recipient

 

Schedule W    W - 3    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Assets    Duplicate Asset Tag – Physical    This report provides information
with respect to duplicate tags on multiple assets.    Scheduled, On Demand.   
GSMRT Tool/Print hardcopy as needed by recipient Assets    Variance – Serial
Number    Asset variance serial number report is a listing of variances between
physical and financial on serial number.    Scheduled, On Demand.   
GSMRT Tool/Print hardcopy as needed by recipient Assets    Variance – Location
   This report provides a listing of variances between physical and financial on
location.    Scheduled, On Demand.    GSMRT Tool/Print hardcopy as needed by
recipient Assets    Variance – Organization    This report provides a listing of
variances between physical and financial on organization.    Scheduled, On
Demand.    GSMRT Tool/Print hardcopy as needed by recipient Assets    Variance –
Model    This report provides a listing of variances between physical and
financial on models.    Scheduled, On Demand.    GSMRT Tool/Print hardcopy as
needed by recipient Assets    Imminent and Expired Lease    This report provides
a listing of assets whose lease stream is scheduled to expire.    Scheduled, On
Demand.    GSMRT Tool/Print hardcopy as needed by recipient Assets    Imminent
and Expired Warranty    This report provides a listing of assets whose warranty
period is scheduled to expire.    Scheduled, On Demand.    GSMRT Tool/Print
hardcopy as needed by recipient Assets    AWOL Assets    This report provides
information with respect to all active assets that are assigned to the Asset
Without Location (AWOL) User ID.    Scheduled, On Demand.    GSMRT Tool/Print
hardcopy as needed by recipient

 

Schedule W    W - 4    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Assets    Stock Assets    This report is a listing of all active assets that are
assigned STOCK.    Scheduled, On Demand.    GSMRT Tool/Print hardcopy as needed
by recipient Assets    Active Assets with Inactive Owners (Primary User)    This
report provides information of all active assets assigned to an inactive primary
user.    Scheduled, On Demand.    GSMRT Tool/Print hardcopy as needed by
recipient Assets    Invalid Serial Numbers    This report is a listing of serial
numbers that do not fit known patterns.    Scheduled, On Demand.    GSMRT
Tool/Print hardcopy as needed by recipient Assets    Information Object – Asset
   This information object contains financial and physical asset information
based on asset tag for the account.    Scheduled, On Demand.    GSMRT Tool/Print
hardcopy as needed by recipient Assets    Information Object - Variance Asset   
This information object contains financial and physical asset information based
on asset tag for the account. The variance information object provides the
capability to query the financial and physical data sources to find variances on
the following: financial assets not in the physical asset data source; physical
assets not in the financial asset data source; and variance between attributes
found in the physical and financial data sources.    Scheduled, On Demand.   
GSMRT Tool/Print hardcopy as needed by recipient Data Center (Mainframe and
Midrange    Resource Summary reporting   

Last full month and month to date drill down reports that include:

 

•        Met or exceed targets

 

•        Missed expected targets but met minimum targets

 

•        Missed minimum targets

 

•        Problem reports for job abnormalities

   Monthly, On Demand    GSMRT Tool/Print hardcopy as needed by recipient

 

Schedule W    W - 5    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Data Center (Mainframe and Midrange    General Availability Detail   
Availability summary with ability to drill down reports.    Monthly, On Demand
   GSMRT Tool/Print hardcopy as needed by recipient Data Center (Mainframe and
Midrange    Configuration report    Configurations in the environment and their
conformance with standards.    Monthly, On Demand    GSMRT Tool/Print hardcopy
as needed by recipient Data Center Midrange    URL Filtering report    Report on
potential malware infections based on excessive visits to sites, individual
usage reports, volume/metric data for services, internet content filtering
configuration, and administration.    On Demand    Data Center (Server)   
Software Currency    Report that describes software versions.    Quarterly,
Annually    Data Center (Server)    Server Refresh Progress report   
Measurement of Server Refresh for performance of maintaining a consistent
Deliverable to End Users by change of technology.    Quarterly, Annually    HN
processes and tools as of the Effective Date Data Center (Server)    Midrange
Systems Performance reporting   

Report detailing performance for the midrange systems (All Platforms):

 

1. CPU utilization across all LPARs

 

2. CPW utilization across all LPARs

 

3. Disk arm utilization across all iSeries LPARs

   Monthly    Data Center (Server)    Monthly RightFax report    Report contains
a detailed listing of every transaction or fax that has been sent or received
for the previous month.    Monthly    Data Center    Mainframe   

Report detailing performance for the mainframe systems for the zSeries and

   Monthly   

 

Schedule W    W - 6    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

(Mainframe)    Systems Performance reporting   

iSeries, including

 

1. CPU utilization across all LPARs.

 

2. CPW utilization

      Cross Tower    Enterprise Change Board Meeting Agenda    This report
contains a summary and detail for all open Change CMR#, Planned Date/Time,
Duration, Requestor, CTI, Group Owner, Client Notification, Priority, Status,
Description.    Bi-weekly, On Demand    GSMRT Tool/Print hardcopy as needed by
recipient Cross Tower    Change Management Performance report   

This report displays a summary for all closed Change records.

 

Report should be broken down as follows:

 

1. Consolidated report by vendor, Tower and Service Area..

 

The report fields included are:

 

Change Type, Priority, Total Successful, Total Successful with Problems, Total
Unsuccessful, Total Process Violations, Total Change by Type, Percentage of
Emergency Changes, Change Category

   Monthly, Quarterly, Annually, On Demand    GSMRT Tool/Print hardcopy as
needed by recipient. Cross Tower    Past Due Changes    This report contains
summary and detail data for all past due Changes. The summary and detail data is
displayed by account major, workgroup and scheduled start date. Past due
criteria = Change start date/time + duration + 1 Business Day.    On Demand   
GSMRT Tool/Print hardcopy as needed by recipient. Cross Tower    Past Due
Measurement    This report contains trend and detail data for all closed past
due Changes. The trend and detail data is displayed by account, major, workgroup
and scheduled start date. Past due criteria = (Change close date/time greater
than Change start date/time + duration + 1 Business Day).    On Demand   
GSMRT Tool/Print hardcopy as needed by recipient.

 

Schedule W    W - 7    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Cross Tower    Technical Change Meeting    This report contains summary and
detail data for all open Change tickets that are not past due. The summary and
detail data is grouped by account major, previous period/current week/future
Changes and scheduled start date.    On Demand    GSMRT Tool/Print
hardcopy as needed by recipient Cross Tower    Percentage of Changes Causing
Problems    Any Problem ticket that has a related Change Notice with a
relationship reason of Change caused Problem on closing is counted in this
metric.    Monthly, Quarterly, Annually, On Demand    GSMRT Tool/Print hardcopy
as needed by recipient Cross Tower    Change Management Violation Summary   
List of Owners with violations, number of violations and details.    Monthly,
Quarterly, Annually, On Demand    GSMRT Tool/Print hardcopy as needed by
recipient Cross Tower    Technology Briefing    Report on technical trends and
independent research on products and services with potential use for Health Net.
   Once per annum    White paper or conference call. Cross Tower   
Security report    Report on security violations to a specific application or
access point, including violations to a specific MAC address, port address, and
UserID where possible.    Monthly, On Demand    GSMRT Tool/Print hardcopy as
needed by recipient. If being generated today IBM will continue to use the
existing tool until it can be customized for gSMRT Cross Tower    Security
Vulnerability report    Entire networks are tested to determine the
susceptibility of their hosts to current attacks. Measurement for this service
is Outside Hours of Operation. Pre-Scheduled Maintenance shall be performed
during periods of service inactivity.    Monthly    IBM will continue to use the
existing tools until it can be customized to GSMRT

 

Schedule W    W - 8    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Cross Tower    IT Security Management    With the approval of an OE VP, requests
for the web usage of specific associates can be requested.    On-Demand      
Static reports             IMAC Assignee Performance Summary    This report is a
listing of all IMAC records opened, closed, cancelled, or in work by IMAC
assignee and category.    On Demand    GSMRT Tool/Print hardcopy as needed by
recipient    IMAC Group Performance Summary    This report is a list of all IMAC
records opened, closed, cancelled, or in work by category.    On Demand      
Information Objects             IMAC - Advanced    This is a tool that allows
the End User to create his/her own reports from the fields available on the
content tab. The data contained in this object provides ticket summary data and
enables the End User to perform ticket analysis    On Demand    GSMRT Tool/Print
hardcopy as needed by recipient    IMAC - All Tasks    This is a tool that
allows the End User to create his/her own reports from the fields available on
the content tab. This object allows user to perform task analysis    On Demand
   GSMRT Tool/Print hardcopy as needed by recipient    Queries            
Active IMACs    This report is a list of all open IMAC records by a group of
ID’s, or by a single ID.    On Demand    GSMRT Tool/Print hardcopy as needed by
recipient    All Tasks Complete - Record Not Closed    This report is a list of
all active IMAC with all tasks 100% complete.    On Demand    GSMRT Tool/Print
hardcopy as needed by recipient

 

Schedule W    W - 9    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

   Coordinator Not Assigned    This report is a listing of all active records
with assignee person equal to unknown.    On Demand    GSMRT Tool/Print
hardcopy as needed by recipient    IMACs
Approaching
SLA    This report is a listing of all IMAC records approaching the SLA for each
category.    On Demand    GSMRT Tool/Print hardcopy as needed by recipient   
IMACs Exceeding SLA    This report is a listing of all open IMAC records
exceeding the SLA for each category.    On Demand    GSMRT Tool/Print hardcopy
as needed by recipient    IMACs Greater than 10 Days    This report is a list of
all active IMAC records aged more than 10 days.    On Demand    GSMRT Tool/Print
hardcopy as needed by recipient    IMACs Met SLA    This report is a listing of
IMAC records that met their SLA.    On Demand    GSMRT Tool/Print hardcopy as
needed by recipient    IMACs Missed SLA    This report is a list of IMAC records
that missed their SLA.    On Demand    GSMRT Tool/Print hardcopy as needed by
recipient    IMACs Set to Held    This report is a list of active IMAC records
that are currently in held status.    On Demand    GSMRT Tool/Print hardcopy as
needed by recipient    Perform Complete - Tracking Incomplete    This report is
a list of active records with completed tasks and incomplete tracking task.   
On Demand    GSMRT Tool/Print hardcopy as needed by recipient

 

Schedule W    W - 10    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

   Task Resource Not Assigned    This report is a listing of all active records
where task assignee person is blank.    On Demand    GSMRT Tool/Print hardcopy
as needed by recipient All Towers    Age Ticket Breakout report    Aging of open
tickets by count per age bucket.    On Demand    GSMRT Tool/Print hardcopy as
needed by recipient All Towers    Daily Morning Incident    This report displays
summary and detail data for all open Incident tickets; sorted by account major,
account minor and then Priority with tickets in a wait state at the bottom of
the report.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Manage
Incident Against Timeframe    This is an Incident management measurement report
which contains Incident tickets resolved within target date by Priority.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Manage Top 10
Incident Measurement    This is an Incident management measurement report which
contains the top 10 reported issues by component.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient

 

Schedule W    W - 11    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

All Towers    Minimize Life Cycle Incident    This is an Incident management
measurement report which displays the average time to close Incident tickets and
the average time to resolve Incident tickets by Priority.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Monthly OOC
Measurement Incident    This report contains a summary of all tickets that were
out of criteria in the timeframe specified by workgroup.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Out Of
Criteria Incident    This report contains open Incident tickets that are either
out of criteria or near out of criteria (where 75% or more of the SLA time has
expired), sorted by workgroup then Priority   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient

 

Schedule W    W - 12    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

All Towers    Queue Hopping Incident    This report contains Incidents which
have been reassigned 3 or more times.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Priority 1 & 2
Incident    This report contains Incident tickets opened within specified time
period: sorted by Priority, status and workgroup.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Age Breakout
Problem report   

Aging Incident and Problem tickets for all open tickets by count per age bucket.

 

Broken down by vendor, Tower, service area

  

Weekly, On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient

 

Schedule W    W - 13    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

All Towers    Daily Morning report    This report displays summary and detail
data for all open Problem Priority 1 and 2 tickets.   

Daily, Monthly, On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   Being created today using Access Database and Remedy. IBM will continue to
use the existing tool until it can be customized for GSMRT. Print Hardcopy as
needed. All Towers    Daily Morning report    This report displays summary and
detail data for all open Problem tickets; sorted by account major, account minor
and then Priority with tickets in a wait state at the bottom of the report.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Manage Problem
Against Timeframe    This is a Problem management measurement report which
contains Problem tickets resolved within target date by Priority.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient

 

Schedule W    W - 14    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

All Towers    Manage Top 10 Problem Measurement    This is a Problem management
measurement report which contains the top 10 reported issues by component.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Closed Ticket
Performance report   

This is a Problem management measurement report which displays the average time
to close Problem tickets and the average time to resolve Problem and Incident
tickets by Priority. This report is for all tickets with the exception of the
Help Desk. The Help Desk will have its own report.

 

The report includes the following:

 

Consolidated Roll up

 

Consolidated Roll up by Vendor

 

By Vendor, Tower, Service Area

  

Monthly, Quarterly, Annually, On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient Help Desk    Closed Ticket
Performance report    This is a Problem management measurement report which
displays the average time to close Problem tickets and the average time to
resolve Problem and Incident tickets by Priority. This is a separate report from
the all Towers report.    *NOTE: These daily reports must be produced and
submitted to Health Net by 06:00 PT daily, containing information current
through 04:30 PT.    GSMRT Tool/Print hardcopy as needed by recipient. If being
generated today IBM will continue to use the existing tool until it can be
customized for GSMRT

 

Schedule W    W - 15    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

All Towers    Monthly OOC Measurement    This report contains a summary of all
tickets that were out of criteria in the timeframe specified by workgroup.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Out Of
Criteria    This report contains open Problem tickets that are either out of
criteria or near out of criteria (where 75% or more of the SLA time has
expired), sorted by workgroup then Priority.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Problems
Summary by Location Type    This is a Problem management measurement summary
report which contains the number of Problems reported by location type.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Problems
Summary by Problem Type    This is a Problem management measurement summary
report which contains the number of Problems reported by type.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient

 

Schedule W    W - 16    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

All Towers    Problems Summary by Assigned Group    This is a Problem management
measurement summary report which contains the number of Problems reported by
assignment group.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Problems
Summary by Priority    This is a Problem management measurement summary report
which contains the number of Problems reported by Priority.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Root Cause
Analysis (RCA) report    This is a report regarding all RCAs performed (and
those in progress) since the previous report for Priority 1 Problems and
Incidents as well as those Priority 2 Problems and Incidents that have been
promoted to a Priority. 1 by Supplier of Health Net including remediation
efforts (if any).   

Weekly, Monthly or as RCAs occur

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient

 

Schedule W    W - 17    Health Net / IBM Confidential

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Final Execution Version

 

All Towers    Problem Management Ticket Queue Hopping    This report contains
Problems which have been reassigned 3 or more times.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Priority 1 & 2
   This report contains Problem tickets opened within specified time period;
sorted by Priority, status and workgroup.   

On Demand

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient All Towers    Service Level
report    report provides service performance results relative to the agreed
Service Levels including trending data.    Monthly    GSMRT Tool/Print hardcopy
as needed by recipient All Towers    DR report    Provide results of Disaster
Recovery testing including applications and the corresponding recovery
timeframes designated by Health Net.    Once per annum    Written report in a
form specified or agreed to between HN and IBM

 

Schedule W    W - 18    Health Net / IBM Confidential

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Final Execution Version

 

Mainframe    CICS Daily Response Time    Provides hourly response time, usage
and utilization data for defined mainframe systems.   

Daily

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

   GSMRT Tool/Print hardcopy as needed by recipient Mainframe    CICS Monthly
Response Time    Provides response time, usage and utilization data for defined
mainframe systems.    Monthly    GSMRT Tool/Print hardcopy as needed by
recipient Mainframe    MVS CPU Box Utilization    Provides response time, usage
and utilization data for defined mainframe systems.    Hourly, Daily, Monthly   
GSMRT Tool/Print hardcopy as needed by recipient Mainframe    MVS CPU LPAR Usage
by Service Class    Provides response time, usage and utilization data for
defined mainframe systems.    Hourly, Daily, Monthly    GSMRT Tool/Print
hardcopy as needed by recipient Mainframe    MVS CPU LPAR Usage by Workload   
Provides response time, usage and utilization data for defined mainframe
systems.    Monthly    GSMRT Tool/Print hardcopy as needed by recipient
Mainframe    MVS DASD Capacity Monthly    Provides response time, usage and
utilization data for defined mainframe systems.    Monthly    GSMRT Tool/Print
hardcopy as needed by recipient Mainframe    MVS Tape Capacity Monthly   
Provides response time, usage and utilization data for defined mainframe
systems.    Monthly    GSMRT Tool/Print hardcopy as needed by recipient

 

Schedule W    W - 19    Health Net / IBM Confidential

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Final Execution Version

 

Mainframe    VM CPU Box Utilization    Provides response time, usage and
utilization data for defined mainframe systems.    Monthly    GSMRT Tool/Print
hardcopy as needed by recipient Mainframe    VM CPU LPAR Usage    Provides
response time, usage and utilization data for defined mainframe systems.   
Monthly    GSMRT Tool/Print hardcopy as needed by recipient Mainframe   
Mainframe Performance Package    Provides response time, usage and utilization
data for defined mainframe systems.    Monthly    GSMRT Tool/Print hardcopy as
needed by recipient

Network

Services

   Network Services Monthly report    Provides a service description and
statistical summary of overall network services delivery, data and voice
services, including Availability, bandwidth utilization, performance, Service
Levels, trouble ticket analysis, fault analysis, Problem determination and
resolution, and root cause analysis results.    Monthly   

Web Portal

Tool/Print hardcopy as needed by recipient

Network

Services

   Network Security Management report    Provides a summary of network security
risks, intrusion attempts, security Incidents, security events, and
countermeasures and corrective actions taken.    Monthly    Tool/Print hardcopy
as needed by recipient

Network

Data

   Firewall Performance report    Provides a summary of firewall performance and
security Incidents and events and corrective actions taken.    Monthly and On
Demand    Tool/Print hardcopy as needed by recipient

Network

Data

   Network Asset Hardware Inventory report    Provides a summary printout of
data network devices.    On demand    Tool/Print hardcopy as needed by recipient

 

Schedule W    W - 20    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Network

Data

   Network Asset Software Inventory report    Provides a summary printout of
data network software.    On demand    Tool/Print hardcopy as needed by
recipient

Network

Data

  

Network Overview Performance

Report

   Provides a narrative and statistical overview of network performance,
including bandwidth usage, traffic loading, traffic volumes and utilization.   
On Demand    Tool/Print hardcopy as needed by recipient

Network

Data

   Performance Management and Historic Trending report    Provides a narrative
and statistical description of network performance and historical trending.   
On Demand    Tool/Print hardcopy as needed by recipient

Network

Data

   Network Device report    Device configuration, CPU and memory utilization.   
On Demand    Tool/Print hardcopy as needed by recipient

Network

Data

   Network Traffic reports    Provides report on WAN utilization, LAN
utilization, and RAS utilization, including throughput, volumes, errors, and
discards.    On Demand    Tool/Print hardcopy as needed by recipient

Network

Data

   VLAN report    Provides report on VLAN configuration, device reports, and
traffic reports.    On Demand    Tool/Print hardcopy as needed by recipient

Network

Data

   RMON reports    Provides RMON report on switched dedicated Ethernet segments
and shared media Ethernet segments.    On Demand    Tool/Print hardcopy as
needed by recipient

Network

Data

   Data network SLA report    Provides report on SLA metrics such as
Availability, latency, etc.    On Demand    Tool/Print hardcopy as needed by
recipient

 

Schedule W    W - 21    Health Net / IBM Confidential

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Final Execution Version

 

Network

Data

  

Load Balancers

Report

   Provides report on load balancer performance.    On Demand    Tool/Print
hardcopy as needed by recipient

Data

Network

   Riverbed Wide Area Application Services report    Provides report on the
performance of the Riverbed Wide Area Application Services appliances    On
Demand    Tool/Print hardcopy as needed by recipient

Data

Network

   Network Architecture Overview Drawings    Provides a high level architecture
description and drawing of the major components (WAN, LAN, and RAS, etc) of the
data network.    Quarterly    Tool/Print hardcopy as needed by recipient. Visio
is used as the drawing media

Data

Network

   WAN, LAN, and RAS Drawings    Provides site network topology and
configuration drawings of the LAN, WAN, and RAS.    On Demand    Tool/Print
hardcopy as needed by recipient. Visio is used as the drawing media

Data

Network

   Billing and Invoicing report    Provides a narrative and statistical summary
of data services ordering, billing, and invoicing.   

Monthly and

On Demand

   Tool/Print hardcopy as needed by recipient. Data Network    Network
Management – Circuit Errors    Circuit Metrics include: Top T1/T3 % error
interfaces, Top T1/T3 coding violations, Top T1/T3 % unavailable seconds, etc.
   Monthly    Data Network    Capacity / Performance Trend Analysis    Actions
by IBM for proactive monitoring and intervention to minimize capacity
bottlenecks and activities to be taken for implementing approved system capacity
and operational usage Change requests.    Monthly    If being generated today
IBM will continue to use the

 

Schedule W    W - 22    Health Net / IBM Confidential

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Final Execution Version

 

   and reporting
Measurement
/ analysis and
periodic
notification
on resource
utilization
and trends
for critical
system
resources.
Service
Measure-
Accuracy of
monitoring
and reporting
threshold
alerts and
anomalies
Res         existing tool until it can be customized for GSMRT Voice Network   
HNFS ACD
SLA
reporting
(AD003)   System metrics include: Rockwell ACD performance, Availability, and
SLA metrics.    Monthly,
Quarterly,
Annually,
On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network    Monthly
VTC Usage
report   Update rolling summary report of VTC usage and share with key business
client.    Monthly,
Quarterly,
Annually,
On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT

 

Schedule W    W - 23    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Voice Network    Quarterly SLA
and Outage
review meeting
with Aspect
Communications    System metrics include: Aspect and Rockwell ACD’s, IVR’s and
peripheral call center applications performance, Availability, and SLA metrics.
   Monthly,
Quarterly,
Annually,
On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network    Monthly SLA
and Outage
review meeting
with AT&T    Availability of the voice communications network, including all
circuits and all associated hardware. Can refer to either the overall
environment or to the voice communications services pertaining to a specific
designated client facility.    Monthly,
Quarterly,
Annually,
On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network    Traffic Analysis
reporting    Traffic Analysis reporting consists of hourly and daily call volume
summary and trunk utilization reports; reports are available from the carrier,
and the PBX.    On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network    Trunk
Utilization
reports    Trunk utilization reports detailing the percentage of usage by each
trunk. The summary reports detail call totals, duration of call, average call
length, and complete and incomplete calls.    On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network    Peak Period Call
Analysis    Call analysis requires periodic monitoring of these reports during
peak periods to ensure the trunk groups are functioning properly and SLA’s
concerning outgoing and incoming blockage are being met; call analysis shall
also define those areas in which there is a pattern of excessive trunking being
experienced.    On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT

 

Schedule W    W - 24    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Voice Network    Detailed
Call
Accounting
reports    Detailed call accounting reports    On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network    OE/HR
reports    OE/HR reporting requirements in support of the performance management
process.    On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network    Monthly
Invoice
Processing    Includes the review of all telecom carrier and service provider
invoices for appropriate charges to service order history and contract rate
compliance, assigning costs to the appropriate cost center, forwarding
authorized invoices to accounts payable for further processing in a timely
fashion that avoids any service disruptions from disconnects due to late or
non-payment, investigate all billing and service inventory errors and
discrepancies to final resolution, documenting and withholding disputed payment
amounts, pursuing and processing credits and corrections, and provides analysis
and ad-hoc reports to management as required for topics including service
inventory, usage history, cost history, dispute history, and cost recovery
performance.    Monthly    If being generated today IBM will continue to use the
existing tool until it can be customized for GSMRT Voice Network – Long Distance
Services    Calling
Card
reports    reports detailing calling cards and usage by card and summary by cost
center.    On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT

 

Schedule W    W - 25    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Voice Network – Long Distance Services    Long
Distance
reports    Provide the following reports to Health Net on dates as established
by Health Net with respect to international long distance or incoming toll-free
usage not to exceed two months in arrears. Call data as a spreadsheet file is to
include: originating number, dialed number, terminating number, date and time,
duration and applicable charges, any account code or authorization codes if
utilized, employee name, cost center, department and billing account
information.    On
Demand
As
requested
by
Health
Net    If being generated today IBM will continue to use the existing tool until
it can be customized for GSMRT Voice Network – Voice Mail Services    Voice
Mail
User
List    Provide list of all users by voice mail number, and list of users by
class of service.    On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network – Voice Mail Services   
Voice
Mail list
of
Names    Provide list of all names of the users that are on the voice mail
system.    On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network – Voice Mail Services   
Voice
Mail
Capacity    Capacity reporting such as available disk space, number of ports in
use, etc.    On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network – Voice Mail Services   
Voice
Mail
Daily
Error
Log    Monitor and address daily error log (lists last 100 errors on the voice
mail system, for review).    On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT

 

Schedule W    W - 26    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Voice Network – Voice Mail Services    Voice Mail
Weekly
Back Up
report    Prepare a weekly back-up report to ensure that there were no problems
with the back-up process.    On
Demand   

Voice

Network

   Voice
network
Architecture
Overview
Drawings    Provides a high level architecture description and drawing of the
major components of the voice network.    Quarterly    Tool/Print hardcopy as
needed by recipient. Visio is used as the drawing media

Voice

Network

   Voice
Network
Asset
Hardware
Inventory
report    Provides a summary printout of voice network devices.    On
demand    Tool/Print hardcopy as needed by recipient

Voice

Network

   Voice
Network
Asset
Software
Inventory
report    Provides a summary printout of voice network software.    On
demand    Tool/Print hardcopy as needed by recipient

Voice

Network

   Voice
Network
Drawings    Provides site network topology and configuration drawings of the
voice network.    On
Demand    Tool/Print hardcopy as needed by recipient. Visio is used as the
drawing media Voice Network    Voice
Network
Performance
report    Provides a narrative and statistical summary of the performance of the
voice network and systems.    Monthly,
Quarterly,
Annually,
On
Demand    Tool/Print hardcopy as needed by recipient.

 

Schedule W    W - 27    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Voice Network    VoIP report    Provides a narrative and statistical summary of
the performance of the voice over IP (VoIP) network and systems.    Monthly ,
Quarterly,
Annually,
On
Demand    Tool/Print hardcopy as needed by recipient. Voice Network    Cisco
VoIP
report    Provides a narrative and statistical summary of the performance of the
Cisco voice over IP (VoIP) network components.    Monthly,
Quarterly,
Annually,
On
Demand    Tool/Print hardcopy as needed by recipient.

Voice

Network

   PBX
Management
report    Provides a narrative and statistical summary of the performance of the
PBX systems.    Monthly ,
Quarterly,
Annually,
On
Demand    Tool/Print hardcopy as needed by recipient.

Voice

Network

   ACD
Management
report    Provides a narrative and statistical summary of the performance of the
ACD systems.    Monthly,
Quarterly,
Annually,
On
Demand    Tool/Print hardcopy as needed by recipient.

Voice

Network

   Voice Network
Transport
report    Provides a narrative and statistical summary of the various voice
transport services.    Monthly,
Quarterly,
Annually,
On
Demand    Tool/Print hardcopy as needed by recipient.

Network

Voice

   Billing and
Invoicing
report    Provides a narrative and statistical summary of voice services
ordering, billing, and invoicing.    Monthly,
Quarterly,
Annually,
On
Demand    Tool/Print hardcopy as needed by recipient. Voice Network –
Teleconferencing Services    Teleconference
Monthly Cost
Summary    Monthly cost summary, including setup cost, bridge connection cost,
long distance cost and feature cost.    Monthly,
Quarterly,
Annually,
On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network – Teleconferencing Services
   Teleconference
Summary
report by Host    Monthly summary report by host, including: conference types,
total number of connects, total number of minutes, total call charges, total
feature charges, and total charges.    Monthly,
Quarterly,
Annually,
On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT

 

Schedule W    W - 28    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Voice Network – Teleconferencing Services    Teleconference
report by Host    Detail report by host, including: conference ID, reserved
minutes, reserved connections, and by conference, including type of access, date
and time connected, total minutes connected, and total cost.    On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network – Teleconferencing Services
   Teleconference
Summary Data
for Long
Distance and
Toll-Free    Summary data for long distance and toll-free billing charges
related to teleconference service.    Monthly,
Quarterly,
Annually,
On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network – Teleconferencing Services
   Teleconference
Automated
reports by Cost
Center for
Vendor and
Contract
Invoice
Summaries    Automated reports by cost center for vendor and contract invoice
summaries.    Monthly ,
Quarterly,
Annually,
On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network – Teleconferencing Services
   Teleconference
Spending    Teleconference spending by month by year.    Monthly,
Quarterly,
Annually,
On
Demand    Spreadsheet Voice Network – Teleconferencing Services   
Teleconference
Number of
Profiles/Hosts    Number of profiles/hosts by month.    Monthly    Spreadsheet

 

Schedule W    W - 29    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Voice Network – Teleconferencing Services    Teleconference
Number of
Reservationless
Accounts    Number of reservationless accounts assigned by month by year.   
Monthly    Spreadsheet Voice Network – Teleconferencing Services   
Teleconference
No Show
Charges    No show teleconference charges by month by host.    Monthly   
Spreadsheet Voice Network – Teleconferencing Services    Teleconference
Counts by Call
Type    Counts by call type (caller paid, 800 host paid, etc) month by year.   
Monthly,
Quarterly,
Annually,
On
Demand    Spreadsheet Voice Network    Toll Free
Number report    Monthly report of all toll-free numbers and associated services
utilized by Health Net. Report detail will include origination and termination
numbers and dates.    Monthly
Quarterly,
Annually,
On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network    Voice Network
Utilization
reports    Monthly utilization reports that include: total number of daily calls
to all toll free numbers, dialed number summary by hour, monthly call volumes,
detailed call analysis (including originating numbers, time of day, duration
etc), calls originated from either selected area code(s) or states (sorting
options    On
Demand    If being generated today IBM will continue to use the existing tool
until it

 

Schedule W    W - 30    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

      also available),call prompter analysis (how many callers pressed 1,
pressed 2 etc) exception reports (caller’s number for calls not answered) and
call completion analysis, and graphical depiction of each toll free number
routing plan as they are added.       can be customized for GSMRT Projects   
Schedule
Variance
report    The schedule variance for a major enhancement or projects    Monthly,
On
Demand    Written report in a form specified in the Procedures Manual Voice
Network    Toll Free
Number
report    Monthly report of all toll-free numbers and associated services
utilized by Health Net. Report detail will include origination and termination
numbers and dates.    Monthly
Quarterly,
Annually,
On
Demand    Voice Network    Traffic and
Cost
Analysis
reports    Hourly/daily/monthly traffic and cost analysis reports including: 800
in-bound network traffic summary report, call detail hourly summary, call detail
traffic summary, report by each 800 number, call detail traffic summary by
state, trunk utilization for all trunk groups, call detail by Health Net
location, call completion analysis, resellers summarized traffic by number, call
prompter summary, traffic by number and date, unassigned Routing Termination
Number (RTN), dial number by RTN    Hourly/
Daily/
Monthly    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Voice Network – Video Conference Services
   Number of
Bridged
Calls    Monthly reporting of number of bridged calls    Monthly    If being
generated today IBM will continue to use the existing tool until it can be
customized for GSMRT Voice Network – Video Conference Services    Video
Conference
Monthly
Invoice
Review    Monthly invoice review and chargeback to user (host) cost center
including chargeback of fee for late cancellation of bridge reservation.   
Monthly    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT

 

Schedule W    W - 31    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Voice Network – Video Conference Services    Video
Conference
Monthly
reports by
Site    Monthly reports by site.    Monthly    If being generated today IBM will
continue to use the existing tool until it can be customized for GSMRT Voice
Network – Video Conference Services    Maintenance
Contracts
for
Hardware
and
Software    Annual renewal of maintenance contract for hardware and software.   
Annual    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Projects    Financial
Variance
reporting    The financial variance for a Project shall not exceed ten percent
(10%). This report applies only to Projects that are not priced by IBM on a
fixed price basis or other basis with an agreed limitation on total price, such
as time and materials with a cap.    Weekly,
Monthly,
On
Demand    Written report in a form specified in the Procedures Manual Cross
Tower    Business
Metrics
report    Reports are based on business department hours, site(s), critical
applications, department, length of outage and user count.    Monthly,
Quarterly,
Annually    GSMRT Cross Tower    ITG
Application
and Services
Detail    Reports are based on application Availability hours, user count,
length of outage and impacted user count.    Monthly,
Quarterly,
Annually    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT

 

Schedule W    W - 32    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Cross Tower    Percentage
of HNFS
Application
Availability    HNFS report to the Government - outage vs. uptimes.    Monthly
   If being generated today IBM will continue to use the existing tool until it
can be customized for GSMRT Data Network Tower    Security
Engineering
Review    Within 30 days of the new quarter, the Supplier must deliver a
completed document, summarizing the previous quarter’s review findings and
suggestions for improvement.    Quarterly    If being generated today IBM will
continue to use the existing tool until it can be customized for GSMRT Data
Network Tower    Security
Engineering
Review    Monthly reports detailing all current efforts and progress towards
Deliverables being worked including the business unit, project name, the
estimated project timeframe and hours assigned to the project.    Monthly    If
being generated today IBM will continue to use the existing tool until it can be
customized for GSMRT Cross Tower, End User Tower    On-line
Director
Services    Reporting on monthly metrics for adds, changes, and deletions of
employee and office locations. Metrics to be delivered electronically and
available securely, on the Health Net Intranet.    Monthly,
On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Cross Tower    Active User
Access
Account
List   

Report should be broken down by system/application (based on Health Net’s
application list)/common share drive and contain all active users.

Data Fields to be included:

1. Assoicate ID # or Contractor ID#

   Weekly,
Monthly,
On
Demand    If being generated today IBM will continue to use the existing tool
until it can be customized

 

Schedule W    W - 33    Health Net / IBM Confidential

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Final Execution Version

 

     

2. User ID

3. User Name

4. Last Used Date

5. Identifier/Privilege

6. Cost Center

7. System

8. Department

      for GSMRT Data Center    Symphony
Role
reports    Sent at the beginning of each month to audit the role access on
Symphony. This is a series of approximately 100 AS400 queries that generate 7
reports.    Monthly    If being generated today IBM will continue to use the
existing tool until it can be customized for GSMRT Data Center    ABS
reports    Sent at the beginning of each month to audit access to BusPlan shared
folders, CLMEXAM and PRVCAPU privileges and the CAP_GUI_READ identifier.   
Monthly    If being generated today IBM will continue to use the existing tool
until it can be customized for GSMRT Data Centerl    Symphony
Keyword
report    Sent once a month to audit access to the BENEREPO keyword on Symphony.
   Monthly    If being generated today IBM will continue to use the existing
tool until it can be customized for GSMRT

 

Schedule W    W - 34    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Data Center    Application Job Failure Summary and Detail report    This report
is a summary of all job failures by application with drill down ability to the
detail information for each failure.    Monthly, Quarterly, Annually, On Demand
   If being generated today IBM will continue to use the existing tool until it
can be customized for GSMRT All Towers    Inventory report    The report will
display a summary count of production work from the Remedy Problem management
application. A start of month ticket and task count of unresolved issues, a
tally of tickets and task that were newly received during the month, a tally of
tickets and task that were resolved during the month and final tally of tickets
and task unresolved at the end of the month.    Monthly, On Demand    If being
generated today IBM will continue to use the existing tool until it can be
customized for GSMRT Voice Network    Telecom Expense Savings report.    Reports
the monthly/annual/one-time value of their telecom network invoice and cost
management activities.    Quarterly    If being generated today, IBM will
continue to use the existing tool until it can be customized for GSMRT. Voice
Network    Telecom IS Request Metrics report.    This would report the number of
telecom IS Requests processed and key metrics such as milestone response times
from received to completion.    Quarterly    If being generated today, IBM will
continue to use the existing tool until it can be customized for GSMRT. Cross
Tower    Audit Reports    Provide Health Net reports regarding audits conducted
by IBM and/or Health Net    As Requested    If being generated today, IBM will
continue to use the existing tool until it can be customized for GSMRT.

 

Schedule W    W - 35    Health Net / IBM Confidential

--------------------------------------------------------------------------------

Final Execution Version

 

Cross Tower    Managed As Pass Through Expenses Report    Provide Health Net
with consolidated reports regarding the status of all Managed As Pass Through
Expenses.    As Requested    If being generated today, IBM will continue to use
the existing tool until it can be customized for GSMRT. Cross Tower    Pure Pass
Through Expenses Report    Provide Health Net with consolidated reports
regarding the status of all Pure Pass Through Expenses.    As Requested    If
being generated today, IBM will continue to use the existing tool until it can
be customized for GSMRT. Data Network Tower    Server / Workstation Patch
Management Process Report    Server/workstation patch management process reports
to provide detailed information of required security system patches. Patches are
currently applied monthly to all Intel based servers and desktops. This process
provides a view to how well the vendor is maintaining currency on this support
component. Exceptions due to application compatibility issues should be noted.
   Monthly    If being generated today, IBM will continue to use the existing
tool until it can be customized for GSMRT. Voice Network Tower    Data / Voice
Circuit Report    Provide reporting for the Transport (Network and Voice)
Resource Category and provide information regarding the size and configuration
of the circuits and services. The report will include average and peak traffic
data for both voice and data circuits and identify any circuits that show little
to no traffic. For data circuits that include bursting charges (i.e. AT&T MIS),
the report will provide information regarding port size and bursting charges to
show that they are optimally configured for price and performance. For services
(i.e. Advanced Features), the report will provide information showing that the
services are optimally configured for price and performance.    Quarterly    If
being generated today, IBM will continue to use the existing tool until it can
be customized for GSMRT. Voice    Project    The report shall include
information on all Projects (including Small Projects),    Monthly    If being
generated

 

Schedule W    W - 36    Health Net / IBM Confidential

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Final Execution Version

 

Network Tower    Implementation Report    including the following: Design change
or new build (verify changes or adds are documented); application changes at
ACD, quality monitor or ATT Route IT are documented; valid run of call flow
change, holiday schedule or design implementation (error free in production);
Build, Run task completed on time and within budget.       today, IBM will
continue to use the existing tool until it can be customized for GSMRT. Helpdesk
   Abandoned Call Rate Daily   

The percent of calls that were abandoned. For example, if the caller selects to
speak to a help desk rep. and hangs up before the call is answered by the help
desk rep., the call is considered as abandoned. It is directly affected by
Average Speed to Answer and/or Percent Answered in X Seconds. If a call center
is meeting Average Speed to Answer and/or Percent Answered in X Seconds and the
service level is reasonably consistent over time, the Abandon Rate is primarily
a reflection of the customer’s satisfaction with the contracted level of
service, not the delivery of that service.

 

The calculation used to obtain this percentage is:

 

Qty. Abandoned divided by Qty. Received * 100 = % Abandoned

 

Note: Qty. Received = (answered + abandoned)

   Hourly, Daily, Weekly, Monthly   

GSMRT Tool/Print hardcopy as needed by recipient

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

Helpdesk    Abandoned Rate Hourly       Hourly, Daily, Weekly, Monthly   

GSMRT Tool/Print hardcopy as needed by recipient

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

Helpdesk    Average Call    The average length of time the caller and helpdesk
representative talk. For    Hourly, Daily,    GSMRT Tool/Print

 

Schedule W    W - 37    Health Net / IBM Confidential

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   Duration   

example, call duration is measured from the time the help desk rep. answers the
call, through the time the call is complete, and the phone is hung up. It is a
direct contributor to Average Call Service Time and an indirect driver of
Average Speed to Answer and Percent Answered in X Seconds. A consistent level of
Average Call Duration with low variance contributes to consistent staffing
estimates.

 

The calculation used to obtain this measurement is:

 

Total Talk Time divided by Qty. Answered = Average Call Duration

   Weekly, Monthly   

hardcopy as needed by recipient

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

Helpdesk    Average Call Out Duration   

The average length of time the helpdesk representative either talks to or leaves
a message for, an end user. It is an indirect driver of Average Speed to Answer
and Percent Answered in X Seconds because it takes agents away from the task of
answering inbound calls.

The calculation used to obtain this measurement is:

Total Outgoing Talk Time divided by Total Outgoing Calls = Average Call Out
Duration

   Hourly, Daily, Weekly, Monthly   

GSMRT Tool/Print hardcopy as needed by recipient

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

Helpdesk    Average Call Service Time Daily    The average call service time is
the Average Total Incoming Talk Time + Average Total Work Time + Time a caller
is placed on Hold / Total Calls Answered (Work time is call related work done
when an agent is not on a call. This mode is entered by the helpdesk rep.,
manually, by pressing the After Call Work (ACW) button on the phone). It is an
indirect driver of Average Speed to Answer and Percent Answered in X Seconds. A
consistent level of Average Call Service Time with low variance contributes to
consistent staffing estimates.    Daily, Weekly, Monthly   

GSMRT Tool/Print hardcopy as needed by recipient

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

 

Schedule W    W - 38    Health Net / IBM Confidential

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Final Execution Version

 

Helpdesk    Average Call Wait Time Daily   

The average time it takes for a caller to reach a helpdesk representative. For
example, when the caller dials the help desk number, a main menu is reached. One
of the choices is to speak to a help desk rep. Wait time is measured from the
time that option is selected, until the call is answered by a help desk rep.
Average Call Service Time and Calls Received directly affect it, as well as the
staffing level. Because it is an average, it tends to be more volatile than a
percentile measurement.

 

The calculation used to obtain this measurement is:

 

Total Wait Time divided by Qty. Answered = Average Wait Time

   Hourly, Daily, Weekly, Monthly   

GSMRT Tool/Print hardcopy as needed by recipient

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

Helpdesk    Average Hold Time Hourly    This metric measures Average Hold Time
the current month to date. This is the average time a caller is placed on hold
by a call center agent. This only frequency for which this report is available
is hourly.    Hourly, Daily, Weekly, Monthly   

GSMRT Tool/Print hardcopy as needed by recipient

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

Helpdesk    Average Time to Abandon Daily   

The average time it takes for a caller to abandon. Average Abandon Time is
measured from the time the caller picks an option to speak to an agent until the
time the caller hangs up.

 

The calculation used to obtain this measurement is:

 

Total Abandon Time divided by Qty. Abandoned = Average Time to Abandon

   Daily, Weekly, Monthly   

GSMRT Tool/Print hardcopy as needed by recipient

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

 

Schedule W    W - 39    Health Net / IBM Confidential

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Final Execution Version

 

Helpdesk    Average Wait Time Hourly   

The average time it takes for a caller to reach a helpdesk representative. For
example, when the caller dials the help desk number, a main menu is reached. One
of the choices is to speak to a help desk rep. Wait time is measured from the
time that option is selected, until the call is answered by a help desk rep.
Average Call Service Time and Calls Received directly affect it, as well as the
staffing level. Because it is an average, it tends to be more volatile than a
percentile measurement.

 

The calculation used to obtain this measurement is:

 

Total Wait Time divided by Qty. Answered = Average Wait Time

   Hourly, Daily, Weekly, Monthly   

GSMRT Tool/Print hardcopy as needed by recipient

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

Helpdesk    Percent of Calls Answered in Acceptable Range Daily   

The percent of time calls are answered within the defined SLA objective. For
example, the caller selects to speak to an agent, and the agent answers the
call. The time between the selection and when the agent answered the call is
tracked and the percent answered within the SLA is reported. Average Call
Service Time and Calls Received directly affect it, as well as the staffing
level. Because it is a percentage measure, it is often more difficult to recover
in a given time period than an average measure would be.

 

The calculation used to obtain this percentage is:

 

Qty. Answered within criteria divided by Qty. Answered * 100 = % Answered within
XX Seconds

   Daily, Weekly, Monthly   

GSMRT Tool/Print hardcopy as needed by recipient

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

Helpdesk    Status Calls Avoided    The status calls avoided is the sum of calls
abandoned by the caller after listening to the call center status message. This
measure is used as a primary workload driver for a call center. As such, it is a
primary determinant of staffing levels required to meet SLAs. While it may be
impossible for a call    Daily, Weekly, Monthly   

GSMRT Tool/Print hardcopy as needed by recipient

 

*NOTE: These

 

Schedule W    W - 40    Health Net / IBM Confidential

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Final Execution Version

 

      center to affect the number of problem calls, efforts to reduce the need
for customers to call back for follow-up, etc. can have a positive effect on the
level of this measure. This measure is not included in the help desk Abandon
Rate.       daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT. Helpdesk    Total
Calls Abandoned Hourly    The total calls abandoned is the sum of calls
abandoned by the call center. This measure is one of the primary workload driver
for a call center. As such, it is a primary determinant of staffing levels
required to meet SLAs. While it may be impossible for a call center to affect
the number of problem calls, efforts to reduce the need for customers to call
back for follow-up, etc. can have a positive effect on the level of this
measure.    Hourly, Daily, Weekly, Monthly   

GSMRT Tool/Print hardcopy as needed by recipient

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

Helpdesk    Total Calls Abandoned Daily    The total calls abandoned is the sum
of calls abandoned by the call center. This measure is one of the primary
workload driver for a call center. As such, it is a primary determinant of
staffing levels required to meet SLAs. While it may be impossible for a call
center to affect the number of problem calls, efforts to reduce the need for
customers to call back for follow-up, etc. can have a positive effect on the
level of this measure.    Hourly, Daily, Weekly, Monthly   

GSMRT Tool/Print hardcopy as needed by recipient

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

Helpdesk    Total Calls Answered    The total calls answered is the sum of calls
answered by the call center. This measure is one of the primary workload driver
for a call center. As such, it is    Hourly, Daily, Weekly, Monthly    GSMRT
Tool/Print hardcopy as needed

 

Schedule W    W - 41    Health Net / IBM Confidential

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Final Execution Version

 

   Daily    a primary determinant of staffing levels required to meet SLAs.
While it may be impossible for a call center to affect the number of problem
calls, efforts to reduce the need for customers to call back for follow-up, etc.
can have a positive effect on the level of this measure      

by recipient

 

*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT.

Helpdesk    Total Calls Answered Hourly    The total calls answered is the sum
of calls answered by the call center. This measure is one of the primary
workload driver for a call center. As such, it is a primary determinant of
staffing levels required to meet SLAs. While it may be impossible for a call
center to affect the number of problem calls, efforts to reduce the need for
customers to call back for follow-up, etc. can have a positive effect on the
level of this measure    Hourly, Daily, Weekly, Monthly    GSMRT Tool/Print
hardcopy as needed by recipient *NOTE: These daily reports must be produced and
submitted to Health Net by 06:00 PT daily, containing information current
through 04:30 PT. Helpdesk    Total Calls Received Daily    The total calls
received is the sum of calls answered and calls abandoned. This report adds the
two data points and displays the total. This measure is the primary workload
driver for a call center. As such, it is a primary determinant of staffing
levels required to meet SLAs. While it may be impossible for a call center to
affect the number of problem calls, efforts to reduce the need for customers to
call back for follow-up, etc. can have a positive effect on the level of this
measure    Hourly, Daily, Weekly, Monthly    GSMRT Tool/Print hardcopy as needed
by recipient *NOTE: These daily reports must be produced and submitted to Health
Net by 06:00 PT daily, containing information current through 04:30 PT.

 

Schedule W    W - 42    Health Net / IBM Confidential

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Final Execution Version

 

Helpdesk    Total Calls Received Hourly    The total calls received is the sum
of calls answered and calls abandoned. This report adds the two data points and
displays the total. This measure is the primary workload driver for a call
center. As such, it is a primary determinant of staffing levels required to meet
SLAs. While it may be impossible for a call center to affect the number of
problem calls, efforts to reduce the need for customers to call back for
follow-up, etc. can have a positive effect on the level of this measure   
Hourly, Daily, Weekly, Monthly    GSMRT Tool/Print hardcopy as needed by
recipient *NOTE: These daily reports must be produced and submitted to Health
Net by 06:00 PT daily, containing information current through 04:30 PT. Helpdesk
   Total Calls Service Time Daily    The Total Call Service time is the Total
Incoming Talk Time + Total Work Time + Time a caller is placed on Hold / Total
Calls Answered (Work time is call related work done when an agent is not on a
call. This mode is entered by the helpdesk rep., manually, by pressing the After
Call Work (ACW) button on the phone). It is an indirect driver of Average Speed
to Answer and Percent Answered in X Seconds. A consistent level of Total Call
Service Time with low variance contributes to consistent staffing estimates.   
Daily, Weekly, Monthly    GSMRT Tool/Print hardcopy as needed by recipient
*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT. Helpdesk    Total
Incoming Talk Time Daily    The actual length of time (in minutes) the caller(s)
and helpdesk representative talk. For example, incoming call talk time is
measured from the time the help desk rep. answers the call, through the time the
call is complete, and the phone is hung up.    Daily, Weekly, Monthly    GSMRT
Tool/Print hardcopy as needed by recipient *NOTE: These daily reports must be
produced and submitted to Health Net by 06:00 PT daily, containing information
current through 04:30 PT.

 

Schedule W    W - 43    Health Net / IBM Confidential

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Final Execution Version

 

Helpdesk    Total Outgoing Calls Daily    The total of all outgoing calls placed
by the help desk representative. Because time spent on Outbound Calls is time
that cannot be spent on Inbound Calls, the level of this measure relative to the
level of Calls Received is an important contributor to staffing requirements,
thus indirectly affecting SLA attainment    Daily, Weekly, Monthly    GSMRT
Tool/Print hardcopy as needed by recipient *NOTE: These daily reports must be
produced and submitted to Health Net by 06:00 PT daily, containing information
current through 04:30 PT. Helpdesk    Total Outgoing Calls Hourly    The total
of all outgoing calls placed by the help desk representative. Because time spent
on Outbound Calls is time that cannot be spent on Inbound Calls, the level of
this measure relative to the level of Calls Received is an important contributor
to staffing requirements, thus indirectly affecting SLA attainment    Hourly,
Daily, Weekly, Monthly    GSMRT Tool/Print hardcopy as needed by recipient
*NOTE: These daily reports must be produced and submitted to Health Net by 06:00
PT daily, containing information current through 04:30 PT. Helpdesk    Total
Outgoing Talk Time Daily    The total outgoing talk time is the total minutes
the help desk spent on outgoing calls    Hourly, Daily, Weekly, Monthly    GSMRT
Tool/Print hardcopy as needed by recipient *NOTE: These daily reports must be
produced and submitted to Health Net by 06:00 PT

 

Schedule W    W - 44    Health Net / IBM Confidential

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Final Execution Version

 

            daily, containing information current through 04:30 PT.

 

Schedule W    W - 45    Health Net / IBM Confidential

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Final Execution Version

 

SCHEDULE X

AUDITS

***

 

Schedule X    X - 1    Health Net / IBM Confidential