[*] CONFIDENTIAL TREATMENT REQUESTED
Exhibit 10.46
EXECUTION COPY
AGREEMENT
BY AND BETWEEN
UNICARE LIFE & HEALTH INSURANCE COMPANY
AND
APAC CUSTOMER SERVICES, INC.

      WellPoint — APAC Agreement   August 10, 2004

 

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1. INTRODUCTION
    1  
 
       
2. CONTRACTING ENTITY
    1  
 
       
3. DEFINITIONS
    1  
 
       
4. TERM AND RENEWAL
    4  
 
       
5. SERVICES
    4  
 
       
6. RESOURCES
    13  
 
       
7. COMPLIANCE WITH LAW
    15  
 
       
8. COMPANY STANDARDS
    16  
 
       
9. COMPANY PROCESSES
    16  
 
       
10. DOCUMENTATION
    16  
 
       
11. PERFORMANCE STANDARDS
    17  
 
       
12. COMPANY RESPONSIBILITIES
    19  
 
       
13. TRANSITIONING EMPLOYEES
    19  
 
       
14. VENDOR CHARGES
    19  
 
       
15. INVOICING
    21  
 
       
16. PAYMENT
    22  
 
       
17. TAXES
    22  
 
       
18. CONTRACT AND RELATIONSHIP MANAGEMENT
    22  
 
       
19. PROPRIETARY RIGHTS
    25  
 
       
20. COMPANY DATA
    27  
 
       
21. CONFIDENTIALITY
    28  
 
       
22. AUDITS
    30  
 
       
23. FORCE MAJEURE
    32  
 
       
24. INDEMNIFICATION
    32  
 
       
25. SPECIAL RULE FOR INFRINGEMENT
    34  
 
       

      WellPoint — APAC Agreement   August 10, 2004

 

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26. REPRESENTATIONS AND WARRANTIES
    34  
 
       
27. TERMINATION BY COMPANY
    36  
 
       
28. TERMINATION BY VENDOR
    38  
 
       
29. TERMINATION/EXPIRATION ASSISTANCE
    38  
 
       
30. DISPUTE RESOLUTION
    39  
 
       
31. LIMITATION OF LIABILITY
    40  
 
       
32. INSURANCE
    41  
 
       
33. MISCELLANEOUS
    42  
 
       

      WellPoint — APAC Agreement   August 10, 2004

 

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AGREEMENT
This Agreement (the “Agreement”) is made as of                 , 2004
(“Effective Date”) by and between Unicare Life & Health Insurance Company, a
Delaware corporation (“Company”), and APAC Customer Services, Inc., an Illinois
corporation (“Vendor”). Company and Vendor may be referred to herein singularly
as a “Party” and collectively as “Parties.”
1. INTRODUCTION
1.1 Objectives. The Parties’ objectives for this Agreement are as follows:
1.1.1 Reduce internal and external processing costs associated with the
activities contemplated by the Services (as defined in Section 5.4), with
continued reduction of such costs throughout the Term (as defined in
Section 4.1); and
1.1.2 Quantifiably improve service to Company’s customers by, among other
things, upgrading (in terms of the qualifications, experience, expertise and
training) the personnel providing the services.
1.2 Interpretation. If the terms of this Agreement are ambiguous or do not
address an issue, this Agreement shall be interpreted so as to give meaning to
the provisions of Section 1.1.
1.3 Conflicts. In the event of any conflict or inconsistency between provisions
within this Agreement, or between this Agreement and any Exhibits or Schedules
attached hereto, such conflict or inconsistency shall be resolved by giving
precedence first to the body of this Agreement, and then to the Schedules and
Exhibits. In the event of a conflict between Schedules and Exhibits, the
Schedules shall prevail.
2. CONTRACTING ENTITY
2.1 Vendor represents and warrants that it is the ultimate parent corporation
within its corporate structure and hereby agrees to personally perform or secure
all of Vendor’s obligations under this Agreement.
3. DEFINITIONS
The following terms, when used in this Agreement, shall have the following
meanings:
3.1 “Abandonment” shall mean the intentional abandonment or material neglect by
Vendor of Vendor’s material duties under this Agreement.
3.2 “Amount at Risk” shall have the meaning ascribed in Section 11.4.2.
3.3 “Approved Centers” shall mean the facilities ascribed in Schedule 5.2.2 to
which Vendor migrates the Services.
3.4 “Changes to Law” shall have the meaning ascribed in Section 7.2.1.

      WellPoint — APAC Agreement   August 10, 2004

 

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3.5 “Company Business Owner” shall have the meaning ascribed in Section 18.2.
3.6 “Company Data” shall have the meaning ascribed in Section 20.1.
3.7 “Company Processes” shall have the meaning ascribed in Section 19.6.
3.8 “Company Project Manager” shall have the meaning ascribed in Section 18.3.
3.9 “Company Responsibilities” shall mean only those tasks and functions
described on Schedule 5.4.2.
3.10 “Company Responsibility Schedule” shall have the meaning ascribed in
Section 5.4.2.
3.11 “Company Software” shall have the meaning ascribed in Section 19.2.
3.12 “Confidential Information” shall have the meaning ascribed in Section 21.2.
3.13 “COTS” shall mean widely available commercial off the shelf software, other
than such software that has been modified in any material respect.
3.14 “Critical Milestones” shall mean the tasks that are of critical importance,
and which have been assigned a Task Completion Date, as such are set forth in
the Project Schedule.
3.15 “Derivatives” shall have the meaning ascribed in Section 10.1.3.
3.16 “Developed Processes” shall have the meaning ascribed in Section 19.7.
3.17 “Developed Software” shall have the meaning ascribed in Section 19.3.
3.18 “Division” shall mean an affiliate of Company.
3.19 “Disinterested Executive” shall have the meaning ascribed in
Section 30.1.1.
3.20 “Electronic Copy” shall have the meaning ascribed in Section 10.1.1.
3.21 “Equivalent Materials” shall have the meaning ascribed in Section 25.1.
3.22 “Force Majeure Event” shall have the meaning ascribed in Section 23.3.
3.23 “Gramm-Leach Bliley” shall mean the Gramm-Leach Bliley Act of 1999, as
amended, together with all rules and regulations promulgated thereunder.
3.24 “Handle Time” shall mean the length of time a Vendor service representative
is actually engage with a Company customer on a call, on hold, or is actually
engage in after-call work.

      WellPoint — APAC Agreement   August 10, 2004

 

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3.25 “Harmful Code” shall mean any computer code, programming instruction or set
of instructions designed and/or constructed with the capability to disrupt,
disable, harm or otherwise impede or shutdown the operation of hardware,
software, systems or data, whatever the circumstances.
3.26 “HIPAA” shall mean the Health Information Portability and Accountability
Act of 1996, as amended, together with all rules and regulations promulgated
thereunder.
3.27 “Key Vendor Employees” shall mean the Vendor Account Manager, each Vendor
Project Manager, and Vendor Personnel filling other Vendor positions identified
in the applicable Statement of Work as “Key”.
3.28 “Management Committee” shall have the meaning ascribed in Section 18.6.
3.29 “Measurement Period” shall have the meaning ascribed in Section 11.1.
3.30 “Migration Plan” shall have the meaning ascribed in Section 6.3.3.2.
3.31 “New Services” shall mean services requested by Company that are materially
different from the Services.
3.32 “Pass Through Expense” shall mean actual, direct expenses without
administrative fee, mark-up or margin of any kind.
3.33 “Performance Standards” shall have the meaning ascribed in Section 11.1.
3.34 “Personnel Rates” shall mean time and materials rates by skill set as set
forth in Schedule 5.8.2, and are applicable throughout the Term.
3.35 “Pilot Period” shall have the meaning ascribed in Section 5.1.1.
3.36 “Pilot Services” shall have the meaning ascribed in Section 5.1.1.
3.37 “Project Delay” shall have the meaning ascribed in Section 5.2.4.
3.38 “Project Schedule” shall have the meaning ascribed in Section 5.2.3.
3.39 “Project Task” shall have the meaning ascribed in Section 5.2.3.
3.40 “Rules of Conduct” shall have the meaning ascribed in Section 18.5.
3.41 “Service Credits” shall have the meaning ascribed in Section 11.4.1.
3.42 “Service Level Default” shall mean a failure by Vendor to meet any of the
Service Level Metrics ascribed in Schedule 11.1.
3.43 “Service Level Schedule” shall have the meaning ascribed in Section 11.1.
3.44 “Service Levels” shall have the meaning ascribed in Section 11.1.

      WellPoint — APAC Agreement   August 10, 2004

 

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3.45 “Services” shall have the meaning ascribed in Section 5.4.
3.46 “Specifications Manual” shall have the meaning ascribed in Section 10.1.1.
3.47 “Statement of Work(s)” or “SOW(s)” means, singularly one and collectively
all of the documents attached hereto as Exhibit A, and which sets forth, for
each Company business unit receiving Services under this Agreement, certain
expressed tasks included as Services.
3.48 “SOW Effective Date” means the date on which an SOW is executed by each
Party.
3.49 “Task Completion Date” shall mean the date set forth in a Project Schedule
for completion of a particular Project Task.
3.50 “Term” shall have the meaning ascribed in Section 4.1.
3.51 “Vendor Account Manager” shall have the meaning ascribed in Section 18.1.
3.52 “Vendor Personnel” shall have the meaning ascribed in Section 6.2.1.
3.53 “Vendor Processes” shall have the meaning ascribed in Section 19.5.1.
3.54 “Vendor Project Manager” shall have the meaning ascribed in Section 18.3.
3.55 “Vendor Software” shall have the meaning ascribed in Section 19.1.
4. TERM AND RENEWAL
4.1 Term. The term of this Agreement (“Term”) shall begin on the Effective Date
and shall end two (2) years thereafter; provided however, that the Term shall be
extended to the last completion date of any SOW(s) then in effect if such SOW(s)
have specified a term longer than the Term stated above.
4.2 Renewal. Notwithstanding the foregoing, Company shall have the right, but
not the obligation, to extend the Term on the then existing terms and conditions
(including such terms and conditions with respect to pricing as set forth in
Section 14) for up to twelve (12) months, upon thirty (30) days prior notice to
Vendor. All extensions under this Section 4.2 shall be deemed to constitute part
of the Term for the purposes of this Agreement. Company shall have such right to
extend this Agreement for two (2) consecutive times.
5. SERVICES
5.1 Pilot.
5.1.1 For each SOW (if requested by Company), Vendor shall perform a limited
scope of Services (the “Pilot Services”) as a pilot during the period specified
in the applicable Statement of Work (the “Pilot Period”). The parties currently
anticipate that the Pilot Services for each SOW will reflect approximately ten
percent (10%) of Company’s daily volumes applicable to such SOW and that the
Pilot Period will last for approximately one (1) month. Reasonably detailed
Pilot success criteria will be set forth in the applicable SOW. At the end of
such period, Company shall elect to (a) have Vendor commence the transition of
the Services as set forth in Section 5.2; (b) resolve Service deficiencies and
perform the Pilot Services again; or (c) terminate the applicable SOW and, if no
other SOW has been agreed upon by the Parties, the Agreement and Company’s
relationship with the Vendor at no additional cost or liability to Company, and
without further obligation hereunder. The Pilot Services shall be as described
in the applicable SOW, together with variances, if any, in the volumes and Pilot
Period described above.

      WellPoint — APAC Agreement   August 10, 2004

 

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5.2 Transition Services.
5.2.1 Vendor shall perform with due care all such functions, tasks and
responsibilities as are required for the effective transition of the Services
(as defined in Section 5.4) from Company to Vendor.
5.2.2 Vendor shall migrate Services to the facilities approved by Company.
During the Term, Vendor shall not migrate the Services from the Approved Centers
without Company’s prior written approval.
5.2.3 Prior to Vendor’s provision of Services under the applicable Statement of
Work, Vendor shall complete certain development and implementation activities,
including but not limited to, the following: (a) development of a detailed
Specifications Manual (as further described in Section 5.2.5) for the Services;
and (b) the performance of a pilot or other similar test in a fashion, as set
forth in Section 5.1.1 above, that provides Company with a reasonable degree of
comfort that Vendor is in a position to perform its obligations in accordance
with the terms of this Agreement. In order to facilitate such development and
implementation activities on a timely basis, each Party shall prepare a
preliminary project schedule in Microsoft Project (using Microsoft Project 2000
or later version) format and provide each such schedule to the other Party
within five (5) business days of the SOW Effective Date. Each Party’s
preliminary project schedule shall describe their respective tasks (each, a
“Project Task”), the sequence in which each Project Task will be undertaken by
the respective Party, and the date by which the respective Party is obligated to
complete each Project Task. The Parties shall each use reasonable efforts and
cooperate to merge the preliminary plans, and mutually agree upon and execute a
document within ten (10) business days of the SOW Effective Date that reflects
their respective development and implementation obligations (the “Project
Schedule”). The Project Schedule shall be attached to the applicable Statement
of Work. In the event that Vendor, through no fault of Company, is unable to
commit to a Project Schedule which is acceptable to Company, in its reasonable
discretion, within thirty (30) days of the SOW Effective Date, Company shall
have the right to immediately terminate such SOW and, if no other SOW has been
agreed upon by the Parties, the Agreement and Company’s relationship with the
Vendor at no cost or liability to Company other than for fees for Services
rendered a of the date of termination, and without further obligation hereunder.
For purposes of clarity, responsibility for planning for any changes to Company
systems shall remain a Company Responsibility.
5.2.3.1 The Project Schedule shall (a) describe the sequence in which each
Project Task will be undertaken by Company or Vendor, (b) describe the
applicable Task Completion Dates, and (c) identify any Critical Milestones.
Under the Project Schedule, Company and Vendor may, at various times during the
development and implementation, be concurrently performing more than one Project
Task. Company and Vendor each hereby agrees to commit sufficient manpower and
resources to complete each Project Task by such task’s respective Task
Completion Date.

      WellPoint — APAC Agreement   August 10, 2004

 

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5.2.3.2 Notwithstanding the foregoing, the Project Schedule shall
(a) incorporate the information required under this Section 5.2.3, (b) address
the period during which the transition will be accomplished, and (c) set forth
the dates on which the Services are to be migrated to the Approved Centers.
5.2.4 Vendor shall transition the Services from Company to Vendor in accordance
with the Project Schedule and without any material disruption to, or degradation
of, Company’s operations or business. In the event that any Critical Milestone
to be met by Vendor fails to occur by the Task Completion Date (such a failure
hereinafter being referred to as a “Project Delay”), Vendor shall work on a
continuous basis to cure the Project Delay and come into conformance with the
Project Schedule. Notwithstanding any provision in this Agreement to the
contrary, in the event any Critical Milestone to be met by Vendor fails to occur
within ten (10) business days after such task’s Task Completion Date, Company
may terminate the affected SOW (or this Agreement if only one (1) SOW is then in
effect) for cause; provided Vendor’s failure to meet the Critical Milestone is
not attributable to a failure on the part of Company to meet any of the Company
Responsibilities under the Project Schedule. Vendor shall bear its own costs
associated with the development and implementation activities described in
Section 5.2.3, and in the event Company terminates an SOW or this Agreement in
accordance with this Section 5.2.4, Vendor shall not be entitled to any
reimbursement from Company for any of Vendor’s development and implementation
efforts.
5.2.5 In consultation with Company, Vendor shall prepare for Company’s review
and approval a detailed Specifications Manual (as defined in Section 10.1).
Vendor shall provide its initial draft of the Specifications Manual to Company
in accordance with the Project Schedule, such initial draft to be substantially
in accordance with Schedule 5.2.5 attached hereto. In the event Company rejects
the Specifications Manual, it shall so notify Vendor in writing, specifying the
nature of the deficiencies or inadequacies contained in such manual, and Vendor
shall use commercially reasonable efforts to further revise such manual until
such time as Company approves in writing the latest revised version submitted by
Vendor. Once approved by Company, the Specifications Manual shall be appended to
and become part of the applicable Statement of Work. In the event that Vendor
fails to provide Company a Specifications Manual that is acceptable to Company
at any time during the process, Company may terminate the SOW, and, if no other
SOW has been agreed upon by the Parties, the Agreement and Company’s
relationship with the Vendor, for cause, at no cost or liability to Company
other than for fees for Services rendered a of the date of termination, and
without further obligation hereunder.
5.2.6 Notwithstanding anything to the contrary, Vendor shall be fully
responsible for the performance and delivery of the Services from and after the
Effective Date.

      WellPoint — APAC Agreement   August 10, 2004

 

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5.3 Delays in Transition.
5.3.1 In the event Vendor fails to complete the transition of any of the
Services from Company to Vendor, or the migration of any of the Services to the
Approved Centers in accordance with the Project Schedule, other than as excused
under Sections 23 and 28.2.2, Company may, in its discretion, terminate the SOW
and, if no other SOW has been agreed upon by the Parties, the Agreement and
Company’s relationship with the Vendor at no cost or liability to Company other
than for fees for Services rendered a of the date of termination, and without
further obligation hereunder or require Vendor to pay to Company as liquidated
damages the actual costs of cover incurred by Company for the performance of the
Services by Company or a third party during such delay within forty-five
(45) days of the accrual of such expense. Company shall use commercially
reasonable efforts to discuss with Vendor Company’s intent to obtain such third
party performance of the Services.
5.4 Services Generally. In addition to the Transition Services, the “Services”
shall include:
5.4.1 The services, functions, tasks and subtasks described in this Agreement
and the Statement(s) of Work, and any Schedules and Exhibits hereto and thereto,
including but not limited to, the Specifications Manual. For purposes of
clarity, the applicable Statement of Work shall contain (a) a description of the
scope of the Services and key deliverables to be furnished thereunder, (b) the
resources Vendor shall provide to perform such Services, (c) the Parties’
respective responsibilities in connection with the Services, (d) the identity of
any third party software or Vendor tools that may be used by Vendor to provide
the Services or included with any deliverable items, (e) other provisions as may
be mutually agreed upon by the Parties hereto, and (f) certain of the applicable
Service Levels (as defined in Section 11.1). The Parties may, subject to the
change control provisions and mutual agreement, amend the applicable Statement
of Work or issue additional Statement(s) of Work; and
5.4.2 The services, functions, tasks, subtasks and the provision of the
deliverables reasonably required for the proper performance of the services
described in this Agreement and the Statement(s) of Work, and any Schedules and
Exhibits hereto and thereto (whether or not such services, functions, tasks,
subtasks and deliverables are expressly described in this Agreement and the
Statement(s) of Work, and any Schedules and Exhibits hereto and thereto) in
accordance with the Performance Standards (as defined in Section 11.1),
including the Service Levels, unless expressly set forth in Schedule 5.4.2 (the
“Company Responsibility Schedule”), and required to be performed by Company
under Section 12.
5.5 Service Recipients. At Company’s election, Vendor shall make the Services,
including New Services, available to Company’s existing and future affiliates at
the pricing and Performance Standards (including the Service Levels) set forth
in this Agreement; provided that if such an affiliate is located at a location
in which Company or its affiliate is not receiving Services as of the date of
such election, and Company requires that Vendor provide a data network circuit
between the Approved Centers and such location, the monthly cost of such circuit
shall be treated as a Pass Through Expense.
5.6 Disaster Avoidance. Upon the SOW Effective Date, Vendor shall create and
maintain disaster avoidance procedures designed to safeguard Company Data (as
defined in Section 20) and the business continuity of the processes for which
Vendor is responsible throughout the Term, subject to Company’s review and
approval. Throughout the Term, Vendor shall revise and maintain these procedures
as necessary in accordance with Section 5.9, subject to Company’s reasonable
approval.

      WellPoint — APAC Agreement   August 10, 2004

 

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5.7 Disaster Recovery. At a minimum, Vendor shall meet the disaster recovery
requirements set forth in Schedule 5.7.
5.8 New Services.
5.8.1 If Company is interested in having Vendor perform New Services, Company
shall provide Vendor with a written request containing sufficient detail to
enable Vendor to provide Company with a proposal to provide such New Services.
Vendor shall provide to Company, within fourteen (14) days after receiving
Company’s written request for New Services, a reasonably detailed proposal
therefore reflecting reasonable terms and conditions for such New Services,
including without limitation a statement of Vendor’s incremental costs in
performing such New Services and the reasonable margin thereon, if any,
requested by the Vendor; provided, however, that Vendor’s proposed charges for
such New Services shall be at least as low as Vendor’s lowest charges to any of
Vendor’s similarly situated customers within the same industry, receiving
comparable services at comparable locations and at comparable volumes and
comparable skill sets.
5.8.2 If Company and Vendor are unable to successfully negotiate such proposal
as provided in Section 5.8.1, and Company still desires that Vendor perform the
New Services, Vendor shall perform them on a time and materials basis, with
labor provided at the Personnel Rates, and materials provided on a Pass Through
Expense basis. If the performance of New Services renders the performance of any
pre-existing Service unnecessary, subject to Company’s prior written consent,
Vendor shall suspend performance of the pre-existing Service and Vendor’s
charges for the Services shall be equitably reduced.
5.8.3 Any New Services that Company elects to have Vendor perform shall be
deemed to be Services, and shall be subject to the terms and conditions of this
Agreement.
5.8.4 Company shall be free to perform itself or have any third party perform
any task, function or responsibility that, if performed by Vendor, would
constitute a New Service. Vendor shall timely and fully cooperate with Company
in the transition of any New Service to Company or a third party designated by
Company.
5.9 Evolution of Services.
5.9.1. Vendor shall provide the Services as they may evolve during the Term to
keep pace with changes in Company’s business requirements, technical
architecture and information technology product standards (including as of the
Effective Date, the standard set forth in Schedule 6.1 and Schedule 8.2),
processes, technology, improvements in the methods of delivering services
reasonably available to Vendor, Changes to Laws, and changes in the market for
the provision of the Services. Such evolution of the Services, functions and
responsibilities performed by Vendor shall be deemed to be part of the Services
and shall not be deemed to be New Services.

      WellPoint — APAC Agreement   August 10, 2004

 

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5.9.2. If Vendor in good faith believes that compliance with this Section 5.9
will result or has resulted in (i) a material adverse effect on its ability to
perform the Services in accordance with the Service Levels or (ii) a material
increase in Vendor’s net costs to provide the Services (the conditions set forth
in (i) and (ii) above shall be referred to herein as an “Potential MAE”), the
Parties’ respective Account Managers will meet and confer for a period no longer
than five (5) days to determine whether a Potential MAE actually exist.
5.9.2.1. If after such period, Company agrees that a Potential MAE exists,
Company shall have the right, in its sole discretion, to either (i) waive
Vendor’s compliance of this Section 5.9 for (but only for) the particular event
that gave rise to the Potential MAE agreed upon by Company, (ii) require Vendor
to comply with this Section 5.9, with such compliance deemed a “Change” and
subject to the change control procedures set forth in Section 5.10 below, or
(iii) relieve the condition that gave rise to the Potential MAE.
5.9.2.2. If after such period, Vendor agrees that a Potential MAE does not
exist, Vendor shall comply with this Section 5.9, and such compliance shall not
be deemed to be a Change or a New Service.
5.9.2.3. If after such period, the Parties are unable to agree whether a
Potential MAE exists, the disagreement shall be subject to the dispute
resolution procedures set forth in Section 30 below. If the dispute resolution
procedure finds that a Potential MAE exists, Company shall have the right, in
its sole discretion, to either (i) waive Vendor’s compliance of this Section 5.9
for (but only for) the particular event that gave rise to the Potential MAE
agreed upon by Company, (ii) require Vendor to comply with this Section 5.9,
with such compliance deemed a “Change” and subject to the change control
procedures set forth in Section 5.10 below; or (iii) relieve the condition that
gave rise to the Potential MAE. If the dispute resolution procedure finds that a
Potential MAE does not exist, Vendor shall comply with this Section 5.9, and
such compliance shall not be deemed to be a Change or a New Service.
5.9.3. The Parties expressly agree and acknowledge that, subject to the
provisions for recovery of fees and expenses under Section 5.10, nothing in this
Section 5.9 shall be deemed to authorize or allow Vendor to change any pricing
or other terms or conditions set forth herein without the express written
consent of Company, which consent may be withheld in Company’s sole discretion.
Any adjustment in fees or expenses arising from a Potential MAE shall be
effective as of the commencement of the Potential MAE.
5.10 Change in Services. Company may, at any time and from time to time, request
in writing that Vendor make changes, modifications or enhancements to the
Services being provided pursuant to the Agreement or any SOW. Changes,
modifications or enhancements to the Services being provided pursuant to the
Agreement or any SOW that are not material shall be deemed to be part of the
Services and shall not be subject to this Section 5.10 or any other change
control provision. Changes, modifications or enhancements to the Services being
provided pursuant to the Agreement that are material (a “Change”) shall be
subject to this Section 5.10. If the Parties are unable to agree whether a
Change, modification or enhancement to the Services are material, the
disagreement shall be subject to the dispute resolution procedures set forth in
Section 30 below.

      WellPoint — APAC Agreement   August 10, 2004

 

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5.10.1 Category 1 and Category 2 Changes.
5.10.1.1 General. A Change may either address (i) Changes required by or because
of applicable law, rule, regulation, settlement or decision, or a change in
Company’s processes arising from a change in law, rule, regulation, settlement
or decision (“Category 1 Change”) or (ii) Changes requested by Company for its
convenience including Changes imposed by compliance by Vendor with the
obligations under Section 5.9 (to the extent such compliance gives rise to a
Potential MAE) (“Category 2 Change”).

  (i)  
The implementation of Category 1 Changes shall be performed by Vendor (x) at the
lower of (i) actual costs and expenses incurred by Vendor (without markup) which
are directly attributable to Company to implement such Category 1 Change or
(ii) the fees set forth on Schedule 14.1; and (y) within the period of time
required for Company to comply with the applicable law, rule, regulation,
settlement or decision (including reasonable time for Company to perform testing
on such Category 1 Change). Furthermore, any reasonable ongoing labor or
infrastructure costs directly attributable to the maintenance of such Category 1
Change after implementation shall be performed by Vendor at reasonable fees and
expenses (in accordance with Schedule 14.1 including the Personnel Rates).
    (ii)  
Category 2 Changes shall be performed by Vendor shall be performed by Vendor
(x) at the lower of (i) actual costs and expenses incurred by Vendor (without
markup) which are directly attributable to Company to implement such Category 2
Change or (ii) the fees set forth on Schedule  14.1, and (y) within the period
of time reasonably required by Company. Vendor shall use best efforts to perform
a Category 2 Change within the period of time agreed by the Parties.
Furthermore, any reasonable ongoing labor or infrastructure costs directly
attributable to the maintenance of such Category 2 Change after implementation
shall also be performed by Vendor at reasonable fees and expenses (in accordance
with Schedule 14.1 including the Personnel Rates).

5.10.1.2 Category 1 Changes.

  (i)  
Requests for Category 1 Changes shall be delivered in writing by the Company to
the Vendor Account Manager. If Vendor desires to initiate a Category 1 Change,
it shall so suggest to the Company Project Manager and Company shall, in its
sole discretion, determine whether or not to issue an Category 1 Change to
Vendor. Vendor shall, in consultation with Company, within ten (10) business
days of its receipt of the request for Category 1 Changes, provide Company with
a firm bid of allowable additional costs (if any), an implementation plan, and
any impacts upon the Services otherwise being performed by Vendor (each, an
“Category 1 Change Plan”).

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  (ii)  
Within thirty (30) days of Company’s receipt of a Category 1 Change Plan,
Company may, in its sole discretion, accept or reject any Category 1 Change
Plan. If Company accepts a Category 1 Change Plan, Vendor shall begin execution
of such Category 1 Change Plan immediately and Company shall pay the additional
fees, if any, set forth in the approved Category 1 Change Plan.

5.10.1.3 Category 2 Changes.

  (i)  
Requests for Category 2 Changes shall be delivered in writing by the Company to
the Vendor Account Manager. If Vendor desires to initiate a Category 2 Change,
it shall so suggest to the Company Project Manager and Company shall, in its
sole discretion, determine whether or not to issue an Category 2 Change to
Vendor. Requests for Category 2 Changes shall be delivered in writing by the
Company to the Vendor Account Manager. Vendor shall, in consultation with
Company, within ten (10) business days of its receipt of the request for
Category 2 Change, provide Company with a firm bid of additional costs (if any),
an implementation plan, and any impacts upon the Services otherwise being
performed by Vendor (each, an “Category 2 Change Plan”).

  (ii)  
Within thirty (30) days of Company’s receipt of an Category 2 Change Plan,
Company may, in its sole discretion, accept or reject any Category 2 Change
Plan. If Company accepts a Category 2 Change Plan, Vendor shall begin execution
of such Category 2 Change Plan as soon as practicable and Company shall be
obligated to pay the additional fees, if any, set forth in the approved Category
2 Change Plan.

5.10.1.4 Vendor shall not be required to make any Change until a Category 1
Change Plan or Category 2 Change Plan, as applicable, has been approved in
writing by Company.
5.10.2 No Changes by Vendor. Except as may be necessary on an emergency basis,
as determined by Company (if this is determined by Company, an individual at
Company must be available to Vendor at all hours to respond to emergencies, or
this should be as determined by Vendor, in its good faith), no changes,
modification or enhancements in Services shall be made without Company’s prior
written consent, which shall be provided at its sole discretion, unless such
change, modification or enhancement: (a) has no impact on the Services being
provided by Vendor; (b) has no impact on the security of Company Data and
Company’s systems; and (c) causes no increase in fees or other costs chargeable
to Company hereunder. If an emergency arises which requires Vendor to make a
change, modification or enhancement to the Services, Vendor shall notify Company
thereof as soon as practicable.
5.11 Reduction in Scope.
5.11.1 Company reserves the right to remove from the scope of this Agreement,
and to perform itself, have one or more third parties perform, or delete
altogether any of the Services. In such event, Vendor’s charges will be
equitably reduced to reflect the reduction in the resources and costs required
for it to provide the remaining Services.

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5.11.2 Vendor shall timely and fully cooperate with Company and assist Company
with the transition of any Service to Company or a third party designated by
Company. Such cooperation shall include, but not be limited to, converting
existing files to the format requested by Company, converting and delivering
data in accordance with Company’s reasonable requirements, providing parallel
services until the transition is completed, and providing onsite technical
support. The preceding Services and tasks shall be performed at the Personnel
Rates.
5.12 Cooperation. Vendor shall fully cooperate with Company and its third party
service providers so that Company may realize and receive the benefit of this
Agreement. Such cooperation shall include access to the Approved Centers used or
expected to be used to provide Services upon reasonable notice by Company.
Company and its third party service providers shall observe all reasonable
security policies governing access to the Approved Centers used to provide
Services while at such Approved Centers. Notwithstanding the foregoing, Company
shall provide Vendor with sufficient notice to enable Vendor to take such
precautions as reasonably necessary to protect Vendor’s Confidential Information
or proprietary information, including business processes, from discovery by or
disclosure to any third party service provider used by Company.
5.13 Forecasts.
5.13.1 For each SOW, Company shall, on the first day of each month, supply
Vendor with a call volume forecast for such month (“Month A”) and the following
two-month period (“Month B” and “Month C”). Such forecasts shall be delineated
by date and call type and shall be given in half-hour increments.
5.13.2 Vendor understands that forecasted total monthly call volume for “Month
C” is purely advisory, and neither party is bound by any variance of this
forecast to its revised forecast one month later (when the total monthly call
volume forecast would be called “Month B”).
5.13.3 An “Uneven Forecast Event” shall exist when Month A’s forecasted total
monthly call volume vary by greater than ten percent (10%) from the total
monthly call volume forecast of the same month when provided one month earlier
(when the total monthly call volume forecast for the month was called “Month
B”). Example: On June 1, 2004, Company supplied Vendor with monthly call volume
forecasts by date and call type in half-hour increments for June (“Month A”),
July (“Month B”), and August (“Month C”). On July 1, 2004, Company supplied
Vendor with monthly call volume forecasts by date and call type in half-hour
increments for July (“Month A”), August (“Month B”), and September (“Month C”).
An Uneven Forecast Event would occur if the July 1, 2004 forecast for Month A
was greater than one hundred-ten percent (110%) of the June 1, 2004 Month B
forecast. When an Uneven Forecast Event occurs, Vendor shall be relieved from
Service Credits resulting from Service Level Defaults of non-quality-related
Service Levels for the specified month.

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5.13.4 An “Unforecasted High Volume Event” shall exist when forecasted call
volumes for a specific day within Month A under-estimate actual call volumes for
the same specific day within Month A by more than twelve percent (12%). When an
Unforecasted High Volume Event occurs, Vendor shall be relieved from Service
Credits results from Service Level Defaults of non-quality-related Service
Levels for the specified day.
5.13.5 An “Unforecasted Low Volume Event” shall exist when forecasted call
volumes for a specific day within Month A over-estimate actual call volumes for
the same specific day within Month A by more than seventeen percent (17%). When
an Unforecasted Low Volume Event occurs, Company shall pay Vendor (in addition
to the calls actually processed by Vendor in accordance with the terms and
conditions contained herein), for an amount of calls equal to: (x) (i) the
forecasted volumes for the day of the Unforecasted Low Volume Event multiplied
by (ii) eighty three percent (83%) minus (y) calls actually processed by Vendor
on the day of the Unforecasted Low Volume Event in accordance with the terms and
conditions contained herein.
6. RESOURCES
6.1 Generally.
6.1.1 Vendor shall be responsible for providing all facilities, hardware,
software, tools, personnel and other resources required for providing the
Services in accordance with the terms and conditions contained herein, including
without limitation the Performance Standards and the Service Levels, and shall
procure and maintain such hardware, software, infrastructure and consents as are
necessary to meet the technical requirements set forth in Schedule 6.1.
6.1.2 Vendor shall staff in such numbers and with such skills and experience as
required to perform the Services in accordance with the Performance Standards,
including the Service Levels. Vendor shall select and train personnel with the
appropriate communications skills to perform the services in accordance with the
Statement of Work and such other representations made by Vendor.
6.2 Personnel.
6.2.1 Vendor shall implement and maintain an ongoing training and education
program designed to further develop and maintain the requisite skills and
knowledge of its employees and the employees of its subcontractors (the “Vendor
Personnel”). Vendor shall report to Company monthly on the programs held during
the prior month, including on attendance.
6.2.2 Without limiting the generality of Section 18.5, Vendor shall use
commercially reasonable efforts to keep the turnover rate of the Vendor
Personnel primarily working on the Company account as low as reasonably
possible, with lower levels of turnover for such personnel performing important
functions than for other personnel. Vendor shall report to Company, on both a
monthly and category of personnel basis, the turnover of the Vendor Personnel
primarily working on the Company account. Notwithstanding the turnover of Vendor
Personnel, Vendor shall remain obligated to perform the Services without
degradation, and in accordance with the terms and conditions of this Agreement.

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6.2.3 Upon Company’s request with regard to specific Vendor Personnel, Vendor
shall immediately remove such Vendor Personnel from providing the Services and
initiate retraining of such Vendor Personnel to enable such personnel to meet
Company’s requirements prior to allowing such Vendor Personnel to again perform
Services. Upon Company’s request with regard to specific Vendor Personnel, and
if either (a) such Vendor Personnel has previously undergone retraining pursuant
to Section 18.4, or (b) Company believes, in good faith, that it would not be in
Company’s best interests to continue receiving Services from such Vendor
Personnel, Vendor shall immediately remove such Vendor Personnel from providing
the Services.
6.3 Vendor Owned or Leased Facilities.
6.3.1 Vendor shall provide such facilities as are required to perform the
Services in accordance with the Performance Standards (including the Service
Levels).
6.3.2 Vendor shall maintain the Approved Centers and any other facilities owned
or leased by Vendor from which Vendor is providing the Services (including
physical security systems, fire detection and suppression systems, environmental
controls, electrical power and backup power) in good working condition. Without
limiting the generality of the foregoing, Vendor shall maintain such facilities
and Approved Centers in at least as current and robust a condition as at the
Effective Date, and otherwise as required to meet the Performance Standards
(including the Service Levels).
6.3.3 In the event Vendor decides during the Term to migrate all or part of the
Services to a location other than those approved by Company as of the Effective
Date, Vendor shall:
6.3.3.1 Obtain Company’s preliminary, tentative approval to such migration
before taking any other steps;
6.3.3.2 If Company provides its preliminary, tentative approval of the
migration, deliver an initial high level draft of its migration plan describing
the methods, procedures and timing of the steps Vendor will take to (i) migrate
the Services, and (ii) avoid degradation of the Services and Performance
Standards (including the Service Levels) during the migration (the “Migration
Plan”);
6.3.3.3 Include in the Migration Plan detailed back-out and contingency plans to
be executed in the event of any failure during the migration. Vendor shall
monitor the migration, document and promptly report to Company any problems
encountered, and promptly resolve such problems;
6.3.3.4 If the migration could possibly impact Company’s charges, benchmark
Company’s charges (and any Company retained costs) at the location from which
the Services are to be migrated to ensure that Company’s charges (or any Company
retained costs) do not increase by reason of the migration. Company shall not be
responsible for any increase in its charges associated with the migration unless
and to the extent such migration has been requested by Company. Vendor shall
indemnify Company against any increased Company retained costs associated with
the migration unless and to the extent such migration has been requested by
Company;

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6.3.3.5 In consultation with Company, and subject to Company’s review and
approval, develop plans for comprehensive migration testing. Such plans shall,
among other things, require that Vendor perform all necessary tests. Vendor
shall not migrate any work prior to successful testing of the location to which
the Services are to be migrated; and
6.3.3.6 Complete the migration in accordance with the time schedule specified in
the Migration Plan, and continue to perform the Services without degradation of
the Services or Performance Standards (including the Service Levels).
7. COMPLIANCE WITH LAW
7.1 Compliance.
7.1.1 Vendor shall perform the Services in accordance with all laws, rules and
regulations, as they may change from time to time applicable to Vendor in its
business as the provider of the Services. Without limiting the generality of the
foregoing, Vendor shall comply with Gramm-Leach-Bliley and the HIPAA Privacy
Rule Standards and Security Rule Standards, as if Vendor were a Covered Entity
(as such term is defined in HIPAA) for purposes of such HIPAA standards. In
addition, Vendor shall comply with the Standards for Electronic Transactions (45
C.F.R. Parts 160 and 162) issued pursuant to HIPAA, including the use of
standard transactions and code sets prescribed by such regulations.
7.1.2 Vendor acknowledges and agrees that it is a Business Associate and is
bound by the provisions of Exhibit BA (Business Associate Exhibit) to this
Agreement. Vendor further acknowledges and agrees that a portion of the Services
may involve the provision of services regulated by Medicare and, therefore,
agrees to be bound by the provisions of Exhibit MC (Medicare Exhibit).
7.2 Monitoring and Changes to Law.
7.2.1 As part of the Services, Vendor shall monitor applicable laws, rules and
regulations and identify any changes thereto that could have a material impact
on its performance and delivery of the Services (“Changes to Law”). For purposes
of clarity, nothing in this Agreement shall prohibit Company from also
monitoring applicable laws, rules and regulations, identifying any Changes to
Law and analyzing their impact on the Services.
7.2.2 Upon identifying a Change to Law, or being notified by Company of a Change
to Law, Vendor shall promptly analyze the impact of such Change to Law on the
Services and notify and propose to Company changes to the Services, if any, that
are reasonably required as a consequence of such Change to Law. Company shall
promptly review such proposal, and upon Company approval, Vendor shall promptly
implement such changes to the Services as well as any other changes requested by
Company and reasonably required as a consequence of a Change to Law. Such
changes to the Services shall be subject to Section 5.10. For purposes of
clarity, Company shall remain responsible for changes to equipment and software
that the Company is responsible for under Schedule 6.1.

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7.3 Licenses, Authorizations and Permits. Vendor shall be responsible for
obtaining all licenses, authorizations, permits and the like required by
applicable laws, rules and regulations which Vendor is required to have in order
to perform the Services, including compliance with any applicable immigration
and naturalization requirements. Any fees, costs or expenses incurred in this
regard shall be borne solely by Vendor.
7.4 Fines and Penalties. Vendor shall be solely responsible for any fines and
penalties imposed on Vendor and/or Company resulting from Vendor’s failure to
comply with the provisions of this Section 7 and any laws, rules or regulations
applicable to Vendor in its business as a provider of the Services.
8. COMPANY STANDARDS
8.1 Vendor will comply with Company’s technical architecture and information
technology product standards existing as of the Effective Date and as they may
reasonably be modified during the Term by Company upon written notice to Vendor,
including without limitation, those listed on Schedule 6.1.
8.2 Vendor will comply with Company’s general business requirements standards
existing as of the Effective Date and as they may reasonably be modified during
the Term by Company upon written notice to Vendor, including without limitation,
those listed on Schedule 8.2.
9. COMPANY PROCESSES
9.1 Within the time period specified in the Project Schedule, or, if no time
period is so specified, within thirty (30) days of the SOW Effective Date,
Vendor shall design the processes and procedures it will use to perform the
Services and ensure in consultation with Company that such processes and
procedures are compatible with the processes and procedures used by Company to
perform services that are not outsourced under this Agreement, to the extent the
Vendor processes and procedures and Company processes and procedures require
interaction between Vendor Personnel and Company personnel (or personnel of
Company’s third party service providers and business partners), or between
Vendor systems and Company systems (or systems of Company’s third party service
providers and business partners).
10. DOCUMENTATION
10.1 Specifications Manual.
10.1.1 Within the time period specified in the Project Schedule, or, if no time
period is so specified, within thirty (30) days of the SOW Effective Date, in
consultation with the Company, Vendor shall prepare specifications, technical
manuals, training manuals, process maps, and other information relating to the
Services, or any equipment or software used in providing the Services that is
appropriate given the scope, nature and volume of the Services (the
“Specifications Manual”). Such Specifications Manual should be in such format,
and contain such content, so as to enable Company to provide the Services itself
at termination or expiration of this Agreement. Vendor shall deliver to Company
copies of the Specifications Manual in an unprotected electronic format
(“Electronic Copy”). Such Specifications Manual shall be complete, and in form
and substance reasonably acceptable to Company, as a condition to the successful
conclusion of the Pilot Period. Company will provide Vendor such assistance as
Vendor may reasonably request in connection with the preparation of this
Specifications Manual.

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10.1.2 Vendor shall revise supplement the Specifications Manual so that it
reflects the equipment, software and processes used to or perform the Services
as they may be changed from time to time in accordance with Sections 5.8, 5.9,
5.10, and 7.2. Any such revisions shall be subject to Company review and
approval, and Vendor shall promptly deliver an Electronic Copy of such revised
or supplemental Specifications Manual to Company.
10.1.3 Company is, and shall for all purposes be deemed to be, the sole and
exclusive owner of the Specifications Manual. In furtherance of the foregoing,
Company has the exclusive right to make any derivative works of (“Derivatives”),
and reproduce copies of, the Specifications Manual, documentation and other
materials provided by Vendor, distribute such copies to its end users, business
partners and other third-party service providers.
11. PERFORMANCE STANDARDS
11.1 Performance Standards and Service Levels. Without limiting the generality
of Section 26 (Representations and Warranties), Vendor shall perform the
Services in accordance with the qualitative and quantitative standards set forth
in this Agreement (collectively, the “Performance Standards”). The quantitative
standards ( the “Service Levels”) shall be as set forth in this Agreement, the
Statements of Work and/or Schedule 11.1 (the “Service Level Schedule”). Unless
otherwise specifically noted under a Statement of Work, the Service Levels shall
be applied on a monthly basis (each such month, a “Measurement Period”).
11.2 Measurement and Monitoring. Although Service Levels shall be applied on a
monthly basis, Vendor shall and Company may track, monitor, measure and report
on its performance as against the Service Levels on a daily basis. Vendor shall
implement the necessary measurement and monitoring tools and procedures required
to accurately and timely monitor and report on Vendor’s performance of the
Services against the applicable Service Levels. At Company’s reasonable request
and subject to Section 5.10, Vendor shall implement additional measurement and
monitoring tools and procedures to assist with measurement of the Service
Levels. Nothing in this provision shall prevent Company from implementing its
own measurement and monitoring tools, at Company’s expense, and Vendor shall
provide reasonable cooperation with Company, including allowing such measurement
and monitoring tools to be connected to Vendor resources. Any fees for labor,
equipment or materials involved in cooperating with Company pursuant to this
Section 11.2 shall be at the rates set forth in the relevant Statement of Work
or the current published rates that Vendor charges for such services, in the
case of labor, and the actual costs of equipment or materials used by Vendor (as
a Pass Through Expense).

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[*] CONFIDENTIAL TREATMENT REQUESTED
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11.3 Adverse Performance Trends. If during the course of any month (e.g., by
reviewing daily performance data), Company becomes aware of adverse performance
trends (e.g., trends indicating the Vendor may not meet the Service Level for
the month), at Company’s request, Vendor shall promptly prepare corrective
action plans to address such adverse performance trends, and with Company’s
approval, promptly implement such plans, even though the applicable Measurement
Period has not been completed and, accordingly, there has not yet been a Service
Level Default.
11.4 Service Credits.
11.4.1 Vendor shall owe Company credits against the fees and costs otherwise due
to Vendor (“Service Credits”) in the event of a Service Level Default, as set
forth in this Section 11.4 and in Schedule 11.1.
11.4.2 Company recognizes that a Vendor’s total monthly exposure to Service
Credits shall be limited. Accordingly, the maximum service Credits owed with
respect to any month shall not exceed [*] percent [*] of the Vendor’s total
charges for all Services provided to the affected Division during such month
under all Statements of Work with such affected Division (the “Amount at Risk”).
Vendor acknowledges that Service Credits will be calculated at the Division
level and shall be based on total Division charges.
11.4.3 A Service Credit shall have a value equal to [*] percent [*] of the
monthly charges that may be billed to the affected Division under this Agreement
during the month in which such Service Credit accrues.
11.4.4 Vendor’s failure to meet a Service Level that is designated as a Critical
Service Level in the relevant Statement of Work shall cause the issuance of
[*] Service Credits to Company.
11.4.5 Vendor’s failure to meet any Service Level not designated as a Critical
Service Level in the relevant Statement of Work shall cause the issuance of
[*] Service Credit to Company.
11.4.6 Service Credits may be used by the affected Division to offset Vendor
charges that are payable by the affected Division. Any Service Credits that have
not been used upon the expiration or termination of this Agreement shall be paid
to the affected Division by Vendor within forty-five (45) days of such
expiration or termination.
11.5 Analysis and Recovery. In the event of a Service Level Default, or if
Company otherwise requests during a month due to adverse performance trends in
accordance with Section 11.3, Vendor shall, as part of the Services, promptly
(a) perform root cause analysis to determine the cause of the Service Level
Default or adverse performance trends, (b) take such steps as are necessary to
recover from such Service Level Default or adverse performance trends,
(c) develop for Company’s review and approval a plan outlining the steps Vendor
will take to minimize to the extent possible the risk that such Service Level
Default or adverse performance trends will reoccur and, (d) with Company’s
approval, implement such plan as soon as practicable. In addition, Vendor shall
promptly report to Company in writing regarding the cause of the Service Level
Default and the steps taken by Vendor.

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11.6 Review of Service Levels. Vendor and Company shall meet at Company’s
request, and in any event at least annually, to review the Service Levels and
determine whether they are appropriate to meet Company’s reasonable business
needs, as such needs may change from time to time, subject to Section 5.10
above. The Parties shall agree, on a prospective basis, to make such reasonable
adjustments so as to ensure that the Service Levels support Company’s reasonable
business needs, as such needs may change from time to time.
11.7 Factors Beyond Vendor’s Reasonable Control. Where Vendor can establish to
the reasonable satisfaction of Company that; (a) the root cause of a Service
Level Default was a factor outside of the reasonable control of Vendor,
(b) Vendor is without fault in causing such factor, (c) Vendor would have
achieved such Service Level but for such factor, and (d) Vendor used
commercially reasonable efforts to (i) foresee and prevent the occurrence of
such factor, and (ii) perform and achieve that Service Level notwithstanding the
presence and impact of such factor, then no Service Credit shall be assessed
against Vendor for any resulting Service Level Default, and Vendor shall
otherwise be excused from achieving such Service Level for so long as the
circumstances relating to such factor and preventing achievement of such Service
Level prevail, provided that Vendor continues to use its commercially reasonable
efforts to prevent, overcome and mitigate the adverse effects of such factor to
the extent required to achieve the applicable Service Level. For purposes of
this provision, a failure of a subcontractor of Vendor shall not be treated as
outside the control of Vendor except to the extent Vendor establishes to
Company’s reasonable satisfaction that the failure is the result of factors
outside the control of both Vendor and the subcontractor.
12. COMPANY RESPONSIBILITIES
12.1 Company Responsibilities. Company shall be responsible for performing the
Company Responsibilities.
12.2 No Other Obligations. Company Responsibilities shall be limited to those
tasks and functions expressly provided in this Agreement or any SOW or as
specifically described in the Company Responsibility Schedule, and Company shall
have no other obligations with respect to Vendor’s performance of the Services.
13. TRANSITIONING EMPLOYEES
13.1 Except as otherwise requested in writing by Company, there shall be no
transition of any Company employees to Vendor.
14. VENDOR CHARGES
14.1 All Fees Stated. All charges for the Services will be as set forth in the
pricing schedule attached hereto as Schedule 14.1. Except as set forth in
Section 5.8 (New Services) or as modified due to a Change pursuant to
Section 5.10 (Change), no other amounts shall be payable by Company or its
customers with respect to the Services or otherwise under this Agreement. In
furtherance, and not in limitation of the foregoing, Vendor acknowledges and
agrees that all expenses relating to the Services are included in Vendor’s
charges and shall not be reimbursed by Company unless agreed to by Company in
writing.

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[*] CONFIDENTIAL TREATMENT REQUESTED
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14.2 [*]Customer Pricing. Vendor’s charges to Company for the Services
(including New Services) shall be [*](b) upon [*] terms and conditions [*] in
this Agreement.
14.3 Certification of Compliance. Annually, or more frequently if reasonably
requested by Company, a senior executive of Vendor will certify to Company in
writing of its compliance with Section 14.2.
14.4 Reductions in Cost/Improvements in Productivity. If general conditions or
technology or process changes materially reduce Vendor’s net recurring costs in
providing the Services, Vendor shall share [*] of those net reduced costs with
Company, and the portion of the amount payable by Company under Section 14.1
allocable to Vendor’s recurring costs in providing the Services shall be reduced
by [*]. For purposes of clarity, Vendor hereby acknowledges and agrees that the
intent of this Section 14.4 is that Vendor’s fees shall be reduced as the
price/performance characteristics of technology and process continue to improve
over time.
14.5 Productivity Improvement.
14.5.1 In addition to Section 14.4 above, Vendor shall guarantee a [*] percent
[*] Handle Time improvement in the average (i.e. across all FTEs) productivity
within [*] months after the end of the baseline period (as described in
Section 14.5.2 below). For the avoidance of doubt, Company shall receive the
benefit of a [*] percent [*] Handle Time improvement in productivity [*] months
after the end of baseline period regardless of whether or not Vendor is able to
meet this guarantee. Company shall measure productivity during a five (5) day
period randomly selected by Company. The [*] percent [*] Handle Time improvement
shall result in a [*] percent [*] reduction in Production Fees set forth in the
pricing schedule attached as Schedule 14.1.
14.5.2 Vendor will baseline actual productivity that meets the quality Service
Levels described herein during the sixty (60) day period after production
transition begins (as defined in the Project Schedule) under each SOW.
14.5.3 The Parties shall share in any productivity gains on a [*] basis after
the first [*] percent [*] Handle Time improvement described above is realized.
14.6 Monthly and Partial Fees. If applicable, periodic fees or charges under
this Agreement are to be computed on a calendar month basis and will be prorated
on a per diem basis for any partial month.
14.7 Charges in US Dollars. All charges shall be in US Dollars.

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14.8 Pricing Adjustments.
14.8.1 Baselines. The initial baseline for pricing adjustments shall be based
upon the current Watson Wyatt Philippine Compensation Report for labor rates in
the “Customer Service Representative” job code in effect at the date of
commencement of production Services under a Statement of Work (the “Prior Labor
Rate”) and the average exchange rate (dollars per peso) for the month preceding
the date of commencement of production Services under a Statement of Work, as
such rates are reported by the Financial Times (the “Prior Exchange Rate”).
After each adjustment, the Prior Labor Rate shall be set to the New Labor Rate
(as defined below) and the Prior Exchange Rate shall be set to the New Exchange
Rate (as defined below).
14.8.2 Adjustment. The first pricing adjustment shall occur on the second
anniversary of a Statement of Work. In no case shall such first pricing
adjustment create an increase or decrease in the Service charges of greater than
nine percent (9%). Subsequent pricing adjustments shall occur on each subsequent
anniversary of the Statement of Work. In no case shall such subsequent pricing
adjustments create an increase or decrease in the Service charges of greater
than eight percent (8%). The adjustments shall be calculated as follows:
14.8.2.1 Determine the then current charges for Services performed in the
Philippines and paid for by Vendor in Philippino Pesos under the relevant
Statement of Work (“Current Charges”).
14.8.2.2 Determine the “Adjusted Labor Factor” by dividing the then-current
Watson Wyatt Philippine Compensation Report for labor rates in the “Customer
Service Representative” job code (“New Labor Rate”) by the Prior Labor Rate (New
Labor Rate / Initial Labor Rate).
14.8.2.3 Determine the “Adjusted Currency Factor” by dividing the average
exchange rate (dollars per peso) for the month preceding the date of the First
Adjustment as such rates are reported by the Financial Times (the “New Exchange
Rate”) by the Prior Exchange Rate (New Exchange Rate / Initial Exchange Rate).
14.8.2.4 Multiply the Current Charges by the First Adjustment Labor Factor and
by the First Adjustment Currency Factor (Current Charges x First Adjustment
Labor Factor x First Adjustment Currency Factor).
14.8.3 Effective date of Adjustment. The adjustment shall modify the pricing
related to the Current Charges as of the anniversary dates upon which such
adjustment occurs.
15. INVOICING
15.1 Form and Calculation of Invoice. Vendor shall invoice Company monthly in
arrears, taking into account all credits then due to Company, including any
Service Credits as provided in Section 11.4 and any reductions as provided in
Sections 5.8.2, 5.11.1, 14.4, 14.5, 25.2 and Schedule 14.1. No amounts shall be
due and payable unless invoiced on a timely basis. Each such invoice shall
contain sufficient detail to allow Company to identify all services rendered and
the source of any other costs contained therein.

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16. PAYMENT
16.1 Payment of Invoices. All undisputed portions of invoices submitted in
accordance with the provisions of Section 15.1 shall be due and payable within
forty five (45) days of receipt by Company of each such invoice.
16.2 Disputed Amounts. Company may withhold payments or portions thereof that it
disputes in good faith, and the Parties shall cooperate to resolve such disputed
amounts. In the event the Parties are unable to resolve the dispute, the Parties
shall follow the dispute resolution procedures set forth in Section 30.
16.3 No Effect of Payment on Vendor’s Other Obligations. The making of any
payment or payments by Company, or the receipt thereof by Vendor, shall in no
way affect the obligations of Vendor under this Agreement, and shall not imply
acceptance by Company of any Service or the waiver of any of Company’s rights
under this Agreement.
16.4 Right to Offset. Company shall have the right to offset any amounts
otherwise due and owing to Vendor under this Agreement, with any amounts owed by
Vendor to Company (including but not limited to Service Credits, as provided in
Section 11.4).
17. TAXES
17.1 General. 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.
17.2 Vendor Obligations. Vendor shall be responsible for any foreign, national,
state and local sales, use, excise, ad valorem, value-added, services,
consumption, and other taxes and duties on any goods or services used or
consumed by it in providing the Services. Vendor shall separately itemize on its
invoice to Company any taxes that under Section 17.3 are the responsibility of
Company. With respect to such taxes, Vendor will be responsible for the timely
filing of returns and the timely remission of the tax.
17.3 Company Obligations. Company shall be responsible for any national, state
and local sales, use, excise, ad valorem, value-added, and other similar taxes
and duties required to be imposed on Company for the receipt of the Services.
17.4 Exceptions to Company Obligations. Notwithstanding the provisions of
Sections 17.1 and 17.3, Vendor shall indemnify Company for any taxes imposed on
Company by a governmental entity in a jurisdiction in which Vendor is performing
services (other than the United States) if the imposition of such tax is the
direct or proximate result of the provision of Services by Vendor in such
jurisdiction.
18. CONTRACT AND RELATIONSHIP MANAGEMENT
18.1 Vendor Account Manager. Vendor shall designate an Account Manager or
Account Managers as necessary (the “Vendor Account Manager”) who shall be
assigned to the Company account. The Vendor Account Manager shall be directly
responsible for coordinating and managing the delivery of the Services and shall
have full authority to act on Vendor’s behalf with respect to all matters
relating to this Agreement. The Vendor Account Manager shall work with the
Company Business Owner to address Company’s concerns and Service problems. The
Vendor Account Manager shall be a Key Vendor Employee, and shall not be replaced
except in accordance with the provisions of Section 18.4.3. Company shall be
entitled to review and approve or disapprove of the personnel filling the Vendor
Account Manager position.

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18.2 Company Business Owner. For the Agreement and for each SOW, Company shall
designate a representative (the “Company Business Owner”) who shall be directly
responsible for overseeing the receipt of the Services from Vendor. The initial
Company Business Owner shall be Gary Radtke. The Company Business Owner shall be
the primary interface with the Vendor Account Manager and shall work with the
Vendor Account Manager to address Company concerns and Service problems. If
Company replaces the Company Business Owner, Company shall notify Vendor in
writing of such replacement.
18.3 Project Managers. Company and Vendor each shall designate a person who
shall be the primary point of contact for inquiries, requests, and other matters
regarding the Project Schedule and the specific Statement of Work (the “Company
Project Manager” and the “Vendor Project Manager” respectively). Such managers
shall also serve as project managers for the completion of the Project Tasks
through the Pilot Period for the applicable Statement of Work. Such individuals
shall be identified in the applicable Statement of Work. Vendor Project Managers
shall be Key Vendor Employees, and shall not be replaced except in accordance
with the provisions of Section 18.4.3. Company shall be entitled to review and
approve or disapprove of the personnel filling Vendor Project Manager positions.
18.4 Key Vendor Employees.
18.4.1 Key Vendor Employees shall be filled by personnel assigned to Company on
a full time basis and located in a mutually agreeable facility. Vendor shall
identify by position the facility at which the person filling that position will
be located.
18.4.2 Company shall be entitled to review and approve or disapprove of the
personnel filling Key Vendor Employee positions.
18.4.3 Other than in the case of a resignation, promotion, departures due to
incapacity or death, or termination for cause under circumstances in which
termination without notice is appropriate, Vendor shall not remove or transfer a
person designated as a Key Vendor Employee without the prior written approval of
Company. Replacements of personnel filling Key Vendor Employee positions shall
have sufficient, skill, training and experience to properly fill the vacated
position.
18.5 Rules of Conduct. Vendor shall ensure that all Vendor Personnel conduct
themselves in a businesslike and professional manner and comply with Company’s
and its affiliates’ reasonable directives, requests, rules and regulations
regarding personal and professional conduct, including without limitation those
relating to all on-site rules of behavior, work schedules, security procedures
and other standards and procedures as may be established by Company from time to
time (collectively, “Rules of Conduct”). In the event that any Vendor Personnel
performing Services under this Agreement is determined by Company in its sole
discretion: (a) to have violated any Rules of Conduct, or (b) to not be
competent in the performance of Services, Company shall notify Vendor of such
fact and Company and Vendor shall promptly meet and confer regarding Vendor’s
providing a replacement for such Vendor Personnel. Any such replacement shall
possess skills that are equal to or greater than the skills required for the
applicable position. With respect to all personnel assigned full-time by Vendor
to perform any of its obligations under this Agreement, and in accordance with
Section 6.2.2, Vendor shall make commercially reasonable efforts to retain such
personnel in such capacity.

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18.6 Management Committee.The Vendor Project Manager, the Company Project
Manager, and one other representative from each of Company and Vendor, shall
form a Management and Communications Committee (the “Management Committee”) to
discuss issues arising from Vendor’s performance of the Services or this
Agreement generally. The Company Project Manager or his or her designee will
chair the Management Committee. Meetings of the Management Committee may be
requested by the Company Project Manager, and in addition to or in replacement
of meetings between the Project Managers otherwise required under Section 18.9.
18.7 Subcontractors.
18.7.1 If Vendor intends to utilize a subcontractor to perform any of the
Services, Vendor shall inform Company of such intention and the identity and
qualifications of the proposed subcontractor.
18.7.2 Vendor may subcontract any Services only with Company’s consent, which
Company may give or withhold in its sole discretion; provided, however, that
Vendor may subcontract Services without Company’s consent provided the Service
in question when viewed individually and with all other Services that have been
subcontracted without consent is not material to the provision of the Services
or the security of Company’s systems, Company’s Confidential Information and
Company Data.
18.7.3 Vendor shall obligate each subcontractor to comply with the terms of this
Agreement. Nothing in this Section 18.7 or in any consent given by Company with
respect to any subcontracting shall relieve vendor of its responsibility for the
performance of any of its obligations under this Agreement or constitute
Company’s consent to further subcontracting.
18.7.4 Vendor shall be responsible for each subcontractor’s compliance with the
terms of this Agreement as well as for the subcontractor’s performance of any
Services in accordance with the Performance Standards (including the Service
Levels). Vendor shall remain Company’s sole point of contact under this
Agreement.
18.7.5 Vendor shall not disclose Company Confidential Information (as defined in
Section 21.2) to a subcontractor unless and until such subcontractor has
executed a non-disclosure agreement that restricts disclosure and use of Company
Confidential Information at least to the same extent as required under
Section 21, and then only on a need to know basis. Without limiting the
generality of Section 18.7.4, and for purposes of clarity, Vendor specifically
acknowledges that it shall be jointly and severally liable for any breaches by a
subcontractor of its obligation of confidentiality.

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18.7.6 Vendor shall obtain written agreements from its subcontractors as are
necessary to provide Company the same rights with respect to the subcontractors
and its personnel as Company has with respect to Vendor and its personnel. For
example, Vendor will obtain such written agreements as are required for Company,
under Section 18.8, to effect the removal from the Company account of
subcontractor personnel.
18.8 Removal of Personnel. After appropriate consultation between Company and
Vendor, at the request of Company, Vendor shall remove from the Company account
any Vendor Personnel that Company in good faith believes should, in the
interests of Company, be removed.
18.9 Meetings and Reports.
18.9.1 During the Pilot Period in which Services are being migrated to Vendor,
and for no less than one (1) month thereafter, at least three (3) times every
week, the Company Project Manager and the Vendor Project Manager shall meet, in
person or through video or audio conferences, with other appropriate Company
personnel and Vendor Personnel to discuss the progress made by the Parties in
the performance of their respective obligations during the preceding week. After
the post - Pilot Period specified above, such meetings between the Company
Project Manager, the Vendor Project Manager and other Company personnel and
Vendor Personnel shall occur as requested by Company.
18.9.2 During the Term, at least once every week, the Vendor Account Manager,
the Company Business Owner and other appropriate additional personnel shall meet
to review the overall status of this Agreement, including the status of any work
in progress, Vendor’s performance of the Services, any changes which the Parties
may consider, new developments with Company’s existing or prospective customers,
and such other business as the Parties may agree to consider.
18.9.3 Company shall be responsible for preparing the agenda for each such
meeting, and shall incorporate any items or issues reasonably requested by
Vendor in writing prior to such meeting.
18.9.4 Company shall circulate the agenda sufficiently in advance for Vendor to
be fully prepared for such meetings. Vendor shall fully analyze and address the
items on the agenda to the extent reasonably practical prior to the meeting.
18.9.5 Vendor shall provide Company such written and electronic reports as
Company may from time-to-time reasonably request. Reports to be provided by
Vendor under this Agreement shall be in such form, and have such content, as
Company may reasonably request.
19. PROPRIETARY RIGHTS
19.1 Vendor Software.
19.1.1 Software that is used by Vendor to perform the Services and owned by or
licensed to Vendor prior to the Effective Date, and software acquired by Vendor
during the Term, and any related documentation, shall remain the exclusive
property of Vendor (“Vendor Software”). Modifications to Vendor Software
developed under this Agreement shall remain the exclusive property of Vendor.

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19.1.2 Vendor shall provide Company such access to and rights to use Vendor
Software during the Term as is reasonably required for Vendor to provide, and
for Company to receive and realize the benefit of, the Services. Vendor shall
not use any Vendor Software in connection with the provision of the Services
without first providing for Company an irrevocable, royalty-free, nonexclusive
license to the software (including available documentation, manuals and other
materials) for Company its designees (including affiliates and third party
service providers) for the sole purpose of providing, receiving and realizing
the benefit of the Services during the Term, and for Company and its designees
to provide to Company (including affiliates) services similar to the Services
thereafter. Vendor shall provide such licenses to the Vendor Software at
Vendor’s sole cost and expense.
19.2 Company Software. Software owned by or licensed to Company prior to or
after the Effective Date (excluding the Vendor Software licensed to Company
under Section 19.1.2 above), together with all fixes, patches, updates,
upgrades, enhancements and modifications thereto, and any related documentation
shall remain the property of Company (“Company Software”).
19.3 Developed Software. Any Software or interfaces developed as Services as
expressly required by this Agreement or under an SOW and any related
documentation, other than modifications to and enhancements of Vendor Software,
shall be deemed to be Company Software, whether created by Vendor, Company, or
Vendor and Company. Such software and related documentation is hereinafter
referred to as “Developed Software.” Developed Software shall be deemed to be
“works made for hire”. Vendor shall assign to Company, at Vendor’s sole cost and
expense, all of Vendor’s right, title and interest in and to Developed Software.
19.4 Third Party Licensed Software. Vendor shall not use any third party
licensed software to provide the Services other than COTS without first
(a) obtaining Company’s written consent, or (b) obtaining for and providing to
Company an irrevocable, royalty-free, nonexclusive right to access and use the
software (including available documentation, manuals and other materials) for
the Company and its designees (including affiliates and third party service
providers) for the sole purpose of providing, receiving and realizing the
benefit of the Services during the Term, and for Company and its designees to
provide to Company (including affiliates) services similar to the Services
thereafter. Vendor shall provide such licenses to the third party software at
Vendor’s sole cost and expense.
19.5 Vendor Processes.
19.5.1 Processes used by Vendor to perform the Services and owned by Vendor
prior to the Effective Date, and processes acquired by Vendor during the Term
shall remain the exclusive property of Vendor (“Vendor Processes”).
Modifications to Vendor Processes developed under this Agreement shall remain
the exclusive property of Vendor.

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19.5.2 Vendor shall not use any Vendor Processes in connection with the
provision of the Services without first providing for Company an irrevocable,
royalty-free, nonexclusive right to access and use the processes (including
available documentation, manuals and other materials) for Company and its
designees (including affiliates and third party service providers) for the sole
purpose of providing, receiving and realizing the benefit of the Services during
the Term and thereafter. Vendor shall not use any third party licensed processes
to provide the Services without first obtaining Company’s written consent or
obtaining for and providing to Company an irrevocable, royalty-free,
nonexclusive license to the processes (including available documentation,
manuals and other materials) for Company and its designees (including affiliates
and third party service providers) for the sole purpose of providing, receiving
and realizing the benefit of the Services during the Term and thereafter. Vendor
shall provide such licenses to the Vendor Processes and the third party
processes at Vendor’s sole cost and expense.
19.6 Company Processes. Processes owned by Company prior to the Effective Date
together with all updates, upgrades, enhancements and modifications thereto, and
any related documentation shall remain the property of Company (“Company
Processes”).
19.7 Developed Processes. Processes developed as Services as expressly required
under this Agreement or under an SOW and any related documentation, other than
modifications to and enhancements of Vendor Processes, shall be deemed to be
Company Processes, whether created by Vendor, Company, or Vendor and Company.
Such processes and related documentation is hereinafter referred to as
“Developed Processes”. Developed Processes shall be deemed to be “works made for
hire”. Vendor shall assign to Company, at Vendor’s sole cost and expense, all of
Vendor’s right, title and interest in Developed Processes.
19.8 Other Deliverables. All literary works or other works of authorship,
including but not limited to the documentation and the Specifications Manual,
and other documents created by Vendor in the course of performing Services,
shall be the sole and exclusive property of Company, and Vendor hereby waives
any moral rights therein and thereto.
19.9 Residual Knowledge. Nothing contained herein shall prohibit or prevent
either Party from using any general concepts, ideas, know-how, methodologies,
processes, techniques or algorithms retained in the unaided memory of such
Party’s personnel which were developed or disclosed under this Agreement,
provided that in doing so such Party does not breach its obligations of
confidentiality under Section 21 or infringe the copyrights, trade secrets,
patents or other proprietary right of the other Party or of third parties who
have licensed or provided materials to such other party.
20. COMPANY DATA
20.1 Ownership and Use. All data and information submitted by Company to Vendor
in connection with the Services or otherwise during the Term, together with all
compilations, redactions, copies (regardless of form), reports, analyses and
other data derived there from (“Company Data”) shall remain the sole and
exclusive property of Company. Company Data shall not be used by Vendor other
than in connection with the provision of the Services to Company. Without
limiting the generality of Sections 7 and 21, Company Data shall not be (a)
disclosed, sold, assigned, leased or otherwise encumbered or provided to third
parties by Vendor, or (b) commercially exploited by or on behalf of Vendor, its
employees or agents. Vendor shall provide such hardware, software, systems and
services as are required for Company to have real time access to work in
process, including any data stored offshore.

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20.2 Safeguarding by Vendor.
20.2.1 Without limiting the generality of Sections 7 and 21, Vendor shall store
all Company Data in a physically and logically secure environment that protects
it from unauthorized access, modification, theft, misuse and destruction.
20.2.2 Without limiting the generality of Sections 7 and 21, Vendor shall
maintain and enforce logical and physical security procedures with respect to
its access and maintenance of Company Data that, at least (a) are equal to high
industry standards for such types of data and locations, (b) are equal to the
standards the Vendor deploys with respect to its own data of a similar kind,
(c) are in accordance with Company’s reasonable security requirements, (d)
provide reasonably appropriate technical and organizational safeguards against
accidental or unlawful destruction, loss, alteration or unauthorized disclosure
or access of Company Data, and (e) otherwise meet the requirements of HIPAA,
Gramm-Leach Bliley, the Sarbanes-Oxley Act of 2002, and other applicable data
privacy laws, rules and regulations.
20.2.3 Without limiting the generality of Sections 7 and 21, Vendor shall take
all measures consistent with high industry standards to secure and defend its
location and equipment against “hackers” and others who may seek, without
authorization, to modify or access Vendor systems or the information found
therein without the consent of Company. Vendor shall periodically test its
systems for potential areas where security could be breached, taking precautions
with respect to unauthorized access to Customer Data that are at least as great
as those taken by Vendor with respect to its own data of a similar kind.
20.2.4 Vendor shall report to Company immediately any breaches of security or
unauthorized access to Vendor systems that Vendor detects or becomes aware of.
Vendor shall use diligent efforts to remedy such breach of security or
unauthorized access in a timely manner.
21. CONFIDENTIALITY
21.1 Treatment of Confidential Information. Each Party recognizes the importance
of the other’s Confidential Information. In particular, each Party recognizes
and agrees that the Confidential Information of the other is critical to their
respective businesses and that neither Party would enter into this Agreement
without assurance that such information and the value thereof shall be protected
as provided in this Section 21 and elsewhere in this Agreement. Accordingly,
each Party agrees as follows:
21.1.1 Each Party shall maintain the confidentiality of the other’s Confidential
Information, using at least the same efforts as it uses to maintain the
confidentiality of its own Confidential Information, and as otherwise required
under applicable laws, rules or regulations;
21.1.2 Each Party shall use and permit use of Confidential Information solely
for the purposes of this Agreement;

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21.1.3 Each Party may disclose or provide access to Confidential Information to
its responsible employees who have a need to know and may make copies of
Confidential Information only to the extent reasonably necessary to carry out
its obligations hereunder;
21.1.4 Each Party may disclose or provide access to Confidential Information to
its consultants, auditors, accountants, and attorneys if such consultants,
auditors, accountants and attorneys have entered into confidentiality agreements
with the Party covering such information or such consultants, auditors,
accountants, and attorneys are otherwise required to maintain the
confidentiality of such information;
21.1.5 Each Party currently has, and in the future shall maintain in effect and
enforce, rules and policies to protect against access to or use or disclosure of
Confidential Information other than in accordance with this Agreement, including
without limitation written instruction to, and agreements with, employees and
agents to ensure that such employees and agents protect the confidentiality of
Confidential Information. Each Party expressly shall instruct its employees and
agents not to disclose Confidential Information to third parties, including
without limitation customers, subcontractors or contractors, without the other’s
prior written consent; and
21.1.6 Each Party shall notify the other immediately of any unauthorized
disclosure or use, and shall cooperate with that Party to protect all
proprietary rights in and ownership of its Confidential Information.
21.2 Confidential Information. Except as otherwise specifically agreed in
writing by the Parties, “Confidential Information” shall include (a) all
information of a Party marked confidential, restricted, proprietary, or with a
similar designation; (b) the terms and conditions of this Agreement and all
correspondence, information and other materials disclosed during the course of
the transaction entailed in this Agreement; (c) any other information which
would be deemed by a reasonable person to be confidential or proprietary,
whether in written, oral, graphic, electronic or any other form, whether or not
marked as stated in (a) above; (d) with respect to information of Company,
Company Data; Company Software and Developed Software; Company Processes and
Developed Processes; sales, cost and other unpublished financial information;
personnel records; personal information of Company’s prospective and current
Customers and employees; product and business plans; business projections,
pricing, and marketing data; technical information and user manuals; and
(e) with respect to information of Company, any other information, whether in
written, oral, graphic, electronic or any other form, whether or not marked as
stated in (a) above, protected health information under the Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”) and other medical
information and personal information regarding Company’s health plan members,
employees, or medical or hospital service providers; other information that
Company is required by law, regulation or company policy to maintain as
confidential; nonpublic personal financial information under Title V of
Gramm-Leach-Bliley Act (15 U.S.C. § 6801 et seq.) and other financial
information concerning Company’s health plan members, employer groups and other
health plan groups or medical or hospital service providers that is disseminated
by Company internally for staff use; patient accounting and billing records, and
information contained in those records; and any information that could aid
others to commit fraud, sabotage or otherwise misuse Company’s products or
services or damage their business.

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21.2.1 Confidential Information shall not include information that (i) is in or
enters the public domain without breach of this Agreement, (ii) the receiving
Party receives from a third party without restriction on disclosure and without
breach of a nondisclosure obligation, or (iii) the receiving Party knew prior to
receiving such information from the disclosing Party or develops independently
without reference to the disclosing Party’s Confidential Information; provided,
however, that the foregoing exclusions shall not apply to information listed
under Section 21.2 (e) above.
21.3 Required Disclosures. A Party shall not be considered to have breached its
obligations by disclosing Confidential Information of the other Party in
accordance with, and to the extent required by, applicable law or to satisfy any
lawful request by a competent governmental body having competent jurisdiction
over the disclosing Party, provided that, immediately upon receiving any such
request and to the extent that it may legally do so, such Party so notifies the
other Party in writing, and if possible, such Party shall provide the other
Party notice not less than five (5) business days prior to the required
disclosure. The disclosing Party shall use reasonable efforts not to release
Confidential Information pending the outcome of any measures taken by the other
Party to contest, otherwise oppose or seek to limit such disclosure by the
disclosing Party and any subsequent disclosure or use of Confidential
Information that may result from such disclosure. The disclosing Party shall
cooperate with the other Party regarding such measures. Notwithstanding any
disclosure, the disclosing Party’s obligations hereunder with respect to
Confidential Information so disclosed shall remain in full force and effect.
21.4 Obligations Upon Disclosure. In the event of any disclosure or loss of, or
inability to account for, any Confidential Information of the furnishing Party,
the receiving Party shall promptly, at its own expense: (a) notify the
furnishing Party in writing; (b) take such actions as may be necessary or
reasonably requested by the furnishing Party to minimize the violation; and
(c) cooperate in all reasonable respects with the furnishing Party to minimize
the violation and any damage resulting there from.
21.5 Return of Confidential Information. On Company’s written request or upon
expiration or termination of this Agreement for any reason, Vendor shall
promptly: (a) return or destroy, at Company’s option, all originals and copies
of all documents and materials it has received containing Company’s Confidential
Information; (b) deliver or destroy, at Company’s option, all originals and
copies of all summaries, records, descriptions, modifications, negatives,
drawings, adoptions and other documents or materials, whether in writing or in
machine-readable form, prepared by Vendor, prepared under its direction, or at
its request from the documents and materials referred to in subparagraph (a),
and (c) provide a notarized written statement to Company certifying that all
documents and materials referred to in subparagraphs (a) and (b) have been
delivered to Company or destroyed, as requested by Company.
22. AUDITS
22.1 Records. Using due care, Vendor shall maintain complete and detailed
records of all financial and non-financial transactions arising in connection
with or as a result of this Agreement.

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22.2 Access.
22.2.1 Vendor shall provide to Company, its internal and external auditors, and
such other Company representatives as Company may from time to time designate,
access at all reasonable times to data and records relating to the Services, to
any facility or part thereof at which Vendor or a subcontractor is providing any
of the Services, and to Vendor Personnel or subcontractor personnel, for the
purpose of performing audits and inspections as provided in this Section 22 or
as required under applicable laws, rules and regulations.
22.2.2 Vendor shall also provide inspectors and regulators having jurisdiction
over Company such access as they require to conduct such audits and inspections
as required under applicable laws, rules or regulations.
22.3 Purpose of Audits. Such audits and inspections may address Vendor’s
performance of the Services and compliance with the terms of this Agreement
including, among other things: (a) the accuracy of invoices; (b) the propriety
of charges; (c) the integrity of Company Data; (d) Vendor compliance with
Section 14.3; (e) Vendor compliance with HIPAA and Gramm-Leach Bliley;
(e) Vendor compliance with Sections 5.6 and 5.7, and (f) the systems that
process, store, and transmit Company Data.
22.4 Vendor Assistance. Vendor shall, at no additional charge, provide persons
and entities permitted to conduct audits under this Section 22 such assistance
as they may reasonably require.
22.5 Notice and Time. Unless Company has a good faith suspicion of fraud,
Company shall provide Vendor reasonable notice for audits or inspections other
than security audits. Audits shall take place during normal business hours, with
the exception of security audits, which may take place outside of normal
business hours at Company’s sole discretion. The Parties shall cooperate so as
to minimize the impact any audit may have on Vendor’s performance of the
Services.
22.6 Remedial Actions. Following an audit or inspection, Company and Vendor
shall meet as soon as practicable to discuss the findings of the auditors or
inspectors, whichever the case may be, and to develop and agree on a course of
action for addressing issues.
22.7 Vendor Audits. Vendor shall share with Company any findings of Vendor’s
auditors or inspections relating to Vendor’s performance of the Services and
compliance with the terms of this Agreement.
22.8 Security Audits. Without limiting the generality of the foregoing, Vendor
shall, at its own expense, perform a security audit no less frequently than
annually. Such an audit shall test Vendor’s compliance to Company’s security
standards and procedures, including those set forth in this Agreement, the
applicable Statement of Work or as required by applicable laws, rules or
regulations. Vendor shall provide Company with the results of each security
audit. If the audit shows any matter that may adversely affect Company, Vendor
shall immediately disclose such matter to Company and provide a detailed plan to
remedy such matter as soon as practicable. For the purposes of clarity, Company
shall have the right to use a third party or its internal staff to conduct an
independent security audit or to monitor the Vendor security audit. If Company
chooses to conduct its own security audit or to monitor the Vendor security
audit, it shall do so at its own expense.

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23. FORCE MAJEURE
23.1 General. A delay by a Party in the performance of its obligations under
this Agreement shall not be deemed a default of this Agreement to the extent
that such delay is attributable to a Force Majeure Event (as defined in
Section 23.3) and could not have prevented by the non-performing Party by means
of the exercise of reasonable precautions, or can not reasonably be circumvented
by the non-performing Party, including through the use of alternate sources or
work-around plans. Notwithstanding the foregoing, Vendor acknowledges and agrees
that this Section 23 shall not limit Vendor’s obligation to provide disaster
recovery Services as described in this Agreement, the applicable Statement of
Work, or any Exhibits and Schedules thereto.
23.2 Cost of Cover. If a Force Majeure Event prevents, hinders or delays for
more than three (3) consecutive days performance of Services that Company
reasonably believes to be necessary for the performance of critical functions,
Company may procure such Services from an alternate source at reasonable
charges, and Vendor shall promptly reimburse Company for an amount equal to the
difference between the fees and expenses paid by Company to such third party
such charges and the normal fees and expenses that Company would have paid to
Vendor for such Services. If such delay continues for more than three
(3) consecutive days, Company may terminate the affected part of this Agreement
or the entire Agreement without any liability (including without payment of any
termination for convenience fees), or further obligation hereunder.
23.3 Force Majeure Event. The term “Force Majeure Event” shall mean a fire,
flood, earthquake, terrorism, or similar act beyond the reasonable control of a
Party. A strike, lockout or similar labor dispute by Vendor Personnel shall be
deemed to be within Vendor’s reasonable control and therefore shall not be
deemed to be a Force Majeure Event. In addition, if Vendor reasonably believes
that an act of war, riot, civil disorder, or rebellion is likely, Vendor may
request that Company move the Services to an alternative Approved Center. If
Company agrees to such move, Vendor shall bear all costs and expenses to perform
and implement the move, and Company shall pay the Personnel Rates applicable to
the new Approved Center. If Company does not agree to move the Services, or if
the event of war, riot, civil disorder, or rebellion was unforeseeable, and an
act of war, riot, civil disorder, or rebellion occurs, such event shall be
deemed to be a Force Majeure Event.
23.4 Allocation of Resources. If a Force Majeure Event causes Vendor to allocate
limited resources between or among Vendor’s customers, Vendor shall not treat
any other customer better than Company.
24. INDEMNIFICATION
24.1 Vendor Indemnification. Vendor agrees to indemnify, defend and hold
harmless Company, its parent, affiliates, subsidiaries, and their respective
officers, directors, employees, consultants and agents from any and all claims,
losses, liability, damages, expenses, and/or costs (including, but not limited
to, court fees, attorney’s fees, and other professional fees) arising from any
third party claim based on allegations of the following:

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24.1.1 A claim arising from Vendor’s failure to observe or perform any duties or
obligations to be observed or performed by Vendor under a third party service
contract to the extent that such duty or obligation is to be observed or
performed by Vendor on or after the Effective Date;
24.1.2 A claim that the Services or any process, hardware, software,
documentation or other materials used by Vendor to provide the Services or
provided by Vendor to Company infringes or misappropriates a patent (domestic or
international), trademark, copyright, trade secret or other proprietary right of
a third party;
24.1.3 A claim arising from Vendor’s breach of any of the representations or
warranties set forth in Section 26 below;
24.1.4 A claim arising from Vendor’s willful misconduct or gross negligence, or
from the Vendor’s failure to perform the Services in accordance with applicable
laws, rules or regulations, or from the violation by Vendor of any statute,
ordinance, regulation or other law, or from Vendor’s criminal conduct.
24.1.5 A claim for personal injury (including death) or damage to real or
personal property caused by Vendor or any person or entity in Vendor’s actual or
constructive control;
24.1.6 A claim asserted against Company but resulting from an act or omission of
Vendor in its capacity as an employer of a person.
24.1.7 A claim arising from the Vendor’s breach of its obligations under
Sections 20 and 21 (Company Data and Confidential Information);
24.1.8 A claim arising from the Vendor’s breach of its obligations under Section
19 (Proprietary Rights).
24.2 Company Indemnification. Company agrees to indemnify, defend and hold
harmless Vendor, its parent, affiliates, subsidiaries, and their respective
officers, directors, employees, consultants and agents from any and all third
party claims, losses, liability, damages, expenses, and/or costs (including, but
not limited to, court fees, attorney’s fees, and other professional fees)
arising from any third party claim based on allegations of the following:
24.2.1 A claim that the use by Vendor in the performance of the Services of
processes, hardware, software, documentation or other materials provided by
Company to Vendor for such purpose infringes or misappropriates a patent,
trademark, copyright, trade secret or other proprietary right of a third party;
24.2.2 A claim arising from Company’s failure to observe or perform any duties
or obligations to be observed or performed by Company under a third party
service contract to the extent that such duty or obligation is to be observed or
performed by Company prior to the Effective Date;

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24.2.3 A claim arising from Company’s breach of its obligations under Section 21
(Confidential Information);
24.2.4 A claim arising from Company’s breach of its obligations under Section 19
(Proprietary Rights);
24.2.5 A claim arising from any representation or warranty made by Company to
its customers or from Company’s failure to provide any product or service to its
customers or any defect or deficiency in any such product or service; and
24.2.6 A claim arising from Company’s breach of any of the representations or
warranties set forth in Sections 26.1 and 26.3 below.
24.3 Procedures for Indemnification. The Party seeking indemnification shall:
(i) give the other Party prompt written notice of any claim, action, suit or
proceeding for which it is seeking indemnity; (ii) grant control of the defense
and settlement to the other Party; provided however that the indemnified Party
shall have the right to consent to any settlement, such consent not to be
unreasonably conditioned, withheld, or delayed; and (iii) reasonably cooperate
with the other Party, at the other Party’s expense.
25. SPECIAL RULE FOR INFRINGEMENT
25.1 Special Rule for Infringement. If all or any part of the hardware,
software, processes, documentation or other materials used by Vendor to provide
the Services or provided by Vendor to Company is, or in either Party’s opinion
is likely to become, the subject of a claim of infringement, Vendor, at its sole
cost and expense, shall procure the right for Company or Vendor, whichever the
case may be, to continue using the hardware, software, processes, documentation
or other materials. If it is not possible for Vendor to procure such right,
Vendor, at its sole cost and expense, shall replace or modify the hardware,
software, processes, documentation or other materials so that it becomes
non-infringing, but so that it shall remain equivalent in features, functions
and capacity (“Equivalent Materials”).
25.2 Removal of Infringing Item. If it is not possible for Vendor to obtain
Equivalent Materials, Vendor shall remove the infringing item from service and
Vendor shall reimburse Company the actual direct costs incurred by Company to
replace the infringing item, and Company’s charges under this Agreement shall be
equitably reduced to reflect the reduction in value, if any, to Company.
26. REPRESENTATIONS AND WARRANTIES
26.1 Mutual Representations.
26.1.1 Each Party represents and warrants to the other that the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by
requisite corporate action on the part of such Party.
26.1.2 Each Party represents and warrants to the other that the execution,
delivery, and performance of this Agreement by it will not constitute a
violation of the laws regulations, ordinances or codes of any competent
jurisdiction; a violation of any judgment, order or decree; a default under any
contract by which any of its assets are bound; or an event that would, with
notice or lapse of time, or both, constitute such a default.

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26.2 Vendor Representations.
26.2.1 Vendor represents and warrants that it shall use sufficient numbers of
personnel to perform the Services in accordance with the terms and conditions
contained herein, including the Performance Standards and the Service Levels.
Vendor further represents and warrants that each person assigned to the Company
account shall have an appropriate degree of training, experience, and skill to
perform the tasks assigned to such person.
26.2.2 Vendor represents and warrants that it shall perform the Services in
accordance with all applicable laws, rules and regulations and in a professional
and workmanlike manner, with at least the same degree of quality and efficiency
as well-managed service providers providing services similar to the Services.
26.2.3 Vendor represents and warrants that it has the right to use all
intellectual property used by it in connection with its performance of the
Services.
26.2.4 Vendor represents and warrants that it shall maintain the equipment and
software for which it is responsible hereunder in good working condition so that
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 as necessary
throughout the Term; and (iii) performing software maintenance in accordance
with the applicable software licensor’s documentation and recommendations,
except to the extent directed otherwise by Company.
26.2.5 Vendor represents and warrants that as of the Effective Date there are no
existing or threatened legal proceedings against Vendor that would have a
material adverse effect upon its ability to perform its obligations under this
Agreement or its financial condition or operations.
26.2.6 Vendor represents and warrants that it shall not block calls properly
routed to it by Company.
26.2.7 Vendor hereby assigns and agrees to deliver to Company all
representations and warranties received by Vendor from third party suppliers, to
the extent such warranties are assignable.
26.3 Company Representation.
26.3.1 Company represents and warrants to Vendor that all information that
Company provides to Vendor in connection with Vendor’s Services, including
information regarding the status of customers with whom Company has an existing
business relationship and information regarding customer lists or databases,
shall, to the best of Company’s knowledge, be accurate, truthful and not
misleading in any way.

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26.4 Harmful Code.
26.4.1 Vendor represents and warrants that Vendor shall not knowingly introduce
Harmful Code, and shall use commercially reasonable efforts to ensure that no
Harmful Code is introduced, into any Company hardware, software or systems of
Company, its customers and business partners, or any hardware, software or
systems acquired by Company from Vendor, or any hardware, software and systems
used by Vendor to provide the Services.
26.4.2 Vendor represents and warrants that it shall not, without the consent of
Company (which consent may be withheld by Company in its sole discretion),
invoke any Harmful Code in any hardware, software or systems of Company, its
customers and business partners, or any hardware, software or systems acquired
by Company from Vendor, or any hardware, software and systems used by Vendor to
provide the Services.
26.5 Additional Software Representations. Vendor represents and warrants that
the Vendor Software and Developed Software: (i) will accurately determine
chronological dates and accurately perform all calculations, data manipulations,
sorting, and transmission of date data regardless of whether the date data
represents or references different centuries and (ii) provide that all date
related user interface functionalities and data fields permit the entry of a
four digit year (i.e., the years 1965, 2065, and 3065 could all be entered by
the user without the need of a manual override) and such date data will result
in accurate calculations, data manipulations, sorting, and transmission of all
data, including the date data.
27. TERMINATION BY COMPANY
27.1 For Cause.
27.1.1 Company shall have the right to terminate this Agreement or any SOW in
whole or in part at any time as of a date set forth in the notice of termination
issued by the Company if (i) there is a material breach of this Agreement or any
SOW, or any part thereof, by Vendor that is not cured within thirty (30) days or
(ii) for Vendor’s Abandonment. Without limiting the generality of the foregoing,
failure to meet the same Service Level in any SOW in three (3) consecutive
months, or in any four (4) months in any rolling twelve (12) month period, shall
be deemed to be a material breach of the affected SOW(s) and this Agreement.
27.1.2 Company shall have the right to terminate this Agreement or any SOW in
whole or in part as of a date set forth in the notice of termination issued by
the Company if there are numerous breaches by Vendor that in the aggregate are
material, even if such breaches are cured.
27.1.3 If a purported termination for cause by Company is found not to be a
proper termination for cause, such termination shall be deemed to be a
termination for convenience.

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27.2 Termination for Change in Offshore Circumstance. If Company reasonably
believes that a change in the political environment in which the Vendor is
providing any material part of the Services has placed the Services and or the
Company at significant risk, such as a coup or serious change in the dynamics of
any political insurrection, Company shall have the right to require Vendor to
move the Services to an alternative off-shore Approved Center. If Company does
not agree with Vendor’s terms to move the Services as described above, Company
shall have the right to terminate this Agreement or any affected SOW without
payment of any termination for convenience fees or any other liability to
Vendor.
27.3 Termination for Change in Regulatory Circumstance. Company shall have the
right to terminate this Agreement or any SOW without payment of any termination
for convenience fees or any other similar charge or not-then-accrued liability
to Vendor in the event that a change in the laws, regulations, ordinances or
codes of any competent jurisdiction substantially impairs the receipt of the
Services on an outsourced basis, or on an outsourced basis under the terms of
this Agreement.
27.4 Termination for Convenience. Company shall have the right to terminate this
Agreement or any SOW for convenience at any time upon written notice to Vendor.
If Company requires that the effective date of the termination is thirty
(30) days or less from the written notice, Company shall pay an early
termination fee (as Company’s sole and exclusive liability to Vendor for such
termination) equal to (i) three (3) months’ of the fees under the affected SOW
(based on the immediately preceding month for such SOW) plus (ii) any waived
implementation costs which shall be prorated over a 24 month period, commencing
on the Effective Date. If Company requires that the effective date of the
termination is less than sixty (60) days but more than thirty (30) days from the
written notice, Company shall pay an early termination fee (as Company’s sole
and exclusive liability to Vendor for such termination) under the affected SOW
equal to (i) two (2) months’ fees under the affected SOW (based on the
immediately preceding month for such SOW) plus (ii) any waived implementation
costs which shall be prorated over a 24 month period, commencing on the
Effective Date. If Company requires that the effective date of the termination
is less than ninety (90) days but more than sixty (60) days from the written
notice, Company shall pay an early termination fee (as Company’s sole and
exclusive liability to Vendor for such termination) under the affected SOW equal
to (i) one and one-half (1.5) months’ fees under the affected SOW (based on the
immediately preceding month for such SOW) plus (ii) any waived implementation
costs which shall be prorated over a 24 month period, commencing on the
Effective Date. If Company requires that the effective date of the termination
is ninety (90) days or more from the written notice, Company shall pay an early
termination fee (as Company’s sole and exclusive liability to Vendor for such
termination) equal to (i) one (1) month’s fees under the affected SOW (based on
the immediately preceding month for such SOW) plus (ii) any waived
implementation costs which shall be prorated over a 24 month period, commencing
on the Effective Date.
27.5 Termination for Change of Control. Company shall have the right to
terminate this Agreement or any SOW without payment of any termination for
convenience fees or any other similar charge or not-then-accrued liability to
Vendor in the event of a change of control of Vendor at any time as of a date
set forth in the notice of termination issued by the Company.

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27.6 Termination for Financial Instability. Company shall have the right to
terminate this Agreement or any SOW without payment of any termination for
convenience fees or any other similar charge or not-then-accrued liability to
Vendor in the event that (i) Vendor’s cash plus Unused Borrowing Capacity is
reported as less than $5,000,000 (as reported in Vendor’s most recent securities
filing with the Securities and Exchange Commission) or (ii) Vendor’s reported
quarterly revenues are less than $56,250,000. For purposes hereof, “Unused
Borrowing Capacity” shall mean the aggregate amount of Vendor’s outstanding
credit facility(s) less borrowings by and standby letters of credit issued on
behalf of Vendor under such credit facility or facilities
27.7 Option to Termination. As an alternative to Company’s rights of termination
set forth herein, Company shall have the option to require Vendor to move the
Services to a different Approved Center that is reasonably acceptable to Company
on the same (except as set forth in the next phrase) terms and conditions;
provided however, that Company shall pay the Personnel Rates applicable to the
new Approved Center.
28. TERMINATION BY VENDOR
28.1 For Cause.
28.1.1 Subject to the provisions of Section 16.2, Vendor shall have the right to
terminate this Agreement if Company fails to pay any undisputed amount equal to
or greater than one month’s charges within thirty (30) days of Company’s receipt
of written notice of failure to pay on a timely basis.
28.1.2 Vendor shall have the right to terminate this Agreement upon a finding
that Company has materially breached its obligations with respect to Vendor
Software and Vendor’s Confidential Information, in either case only if Company
fails to cure such breach within thirty (30) days of receipt of written notice
from Vendor.
28.2 No Other Termination Rights.
28.2.1 Except as provided in this Section 28, Vendor shall have no other rights
to terminate this Agreement.
28.2.2 Company’s failure to perform Company Responsibilities shall not be
grounds for termination by Vendor; provided, however, that Vendor’s
non-performance of its obligations under this Agreement shall be excused if and
to the extent (a) Vendor’s non-performance results from Company’s failure to
perform the Company Responsibilities, and (b) Vendor provides Company with
reasonable notice of such non-performance and uses commercially reasonable
efforts to perform notwithstanding Company’s failure to perform its Company
Responsibilities.
29. TERMINATION/EXPIRATION ASSISTANCE
29.1 Termination/Expiration Assistance. Upon termination of this Agreement in
whole or in part for any reason, or upon expiration of this Agreement, Vendor
shall provide Company such assistance as Company may reasonably request to
effect the seamless transition of the Services from Vendor to Company or
Company’s designee. The termination/expiration assistance shall include the
continuing provision of some or all of the Services for up to six (6) months
after expiration or notice of termination.

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29.2 Duration of Transition Assistance. Vendor shall provide transition
assistance other than the continuing provision of the Services for up to six
(6) months after expiration or notice of termination.
29.3 Equipment and Contract. At termination or expiration Company shall have the
option to purchase or acquire the lease (to the extent assignable) for any of
the equipment owned by Vendor and used primarily to provide the Services to
Company (and no other Vendor customer). Vendor will sell such equipment to
Company at fair market value, with fair market value being deemed to be the
average of each Party’s documented estimate of the value of such equipment.
29.4 Assignment of Third Party Contracts. Company and its designee shall have
the option exercisable on a contract-by-contract basis to assume contracts for
any Services provided by third parties to Vendor and used primarily by Vendor to
provide the Services to Company (and no other Vendor customer). In the case of
other third party contracts used by Vendor to provide the Services to Company,
Vendor shall use commercially reasonable efforts to arrange for the provision to
Company of the Services by the third party under terms at least as favorable as
those set forth in such third party contract.
29.5 Non-Solicitation. During the Term of this Agreement and for a period of one
(1) year after the date of expiration or termination of this Agreement, neither
Party will knowingly solicit any of the other Party’s employees who were
directly involved in the delivery or receipt of the Services. The restrictions
contained in this paragraph regarding non-solicitation of employees will not
apply to any of the following: (a) to the extent that any such employee has
ceased to be employed by a Party for at least six (6) months prior to being
solicited; or (b) to the extent that an employee responds (without specific
solicitation) to a general solicitation through newspapers or other publications
of general circulation, placement agencies or similar means; or (c) as otherwise
mutually agreed upon by the Parties.
29.6 Return of Company Data and Software. At termination or expiration, or upon
Company’s earlier request, Vendor shall promptly return to Company, in the
format and on the media reasonably requested by Company, all Company Data,
Company Software and Developed Software, and Vendor shall not retain, and shall
not allow any third party to retain, any copies whatsoever, unless authorized in
writing by Company.
30. DISPUTE RESOLUTION
30.1 Informal Dispute Resolution.
30.1.1 Prior to instituting formal proceedings as set forth in Section 30.2, the
Parties shall attempt to resolve all disputes arising out of or relating to this
Agreement informally. To invoke this process a Party shall appoint a senior
executive who is not responsible for the day to day management of this Agreement
or the Services (a “Disinterested Executive”), and request that the other Party
do the same. The other Party shall make such appointment within five (5) days of
receipt of the request. The Disinterested Executives shall then spend up to
thirty (30) days attempting in good faith to resolve the matter.

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30.1.2 The informal dispute resolution process shall terminate at the end of the
thirty (30) day period unless extended by mutual agreement.
30.1.3 Nothing in this Section 30.1 shall prevent, or be construed as
preventing, a Party from (a) instituting formal proceedings to avoid the
expiration of any applicable limitations period, or (b) seeking injunctive or
other equitable relief in a court of appropriate jurisdiction.
30.2 Formal Dispute Resolution.
30.2.1 Disputes not resolved by informal dispute resolution as provided in
Section 30.1 shall be resolved by litigation unless, on a case-by-case basis,
the Parties agree to submit the dispute to arbitration. Any agreement to submit
a dispute to arbitration shall set forth the applicable rules and procedures to
govern the arbitration.
30.2.2 Each Party has a duty to mitigate the damages that would otherwise be
recoverable from the other pursuant to this Agreement by using good faith in
taking appropriate and reasonable actions to reduce or limit the amount of such
damages.
30.3 Continued Performance. Each Party agrees to continue the performance of its
obligations under this Agreement while a dispute is pending unless the dispute
precludes such performance. A dispute over payment shall not preclude
performance, provided that undisputed amounts continue to be paid.
30.4 Governing Law. This Agreement and performance under it shall be governed by
and construed in accordance with the substantive provisions of the laws of the
State of California, without regard to its choice of law rules.
30.5 Jurisdiction and Venue. Each Party irrevocably agrees that any legal
action, suit, or proceeding brought by it in any way arising out of the
agreement must be brought solely and exclusively in state or federal courts in
Los Angeles County, California, and each Party irrevocably accepts and submits
to the sole and exclusive jurisdiction of each of the aforesaid courts in
personam, generally and unconditionally with respect to any action, suit, or
proceeding brought by it or against it by the other Party.
31. LIMITATION OF LIABILITY
31.1 General.
31.1.1 Each Party shall be liable to the other for actual direct damages
incurred by the other as a consequence of the breach by a Party of the terms of
this Agreement. The Parties agree not to assert that the cost of cover, if
otherwise recoverable hereunder, is not recoverable hereunder solely because the
cost of cover is a consequential damage.
31.1.2 Except as set forth in Section 31.2, to the extent permitted by
applicable law, neither Party shall be liable to the other for special, indirect
or consequential damages (including lost profits or savings), even if the Party
has been advised of the possibility of such damages.

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31.1.3 Except as set forth in Section 31.2, to the extent permitted by
applicable law, the damages for which a Party may be liable under this Agreement
shall be limited to the greater of (i) Five Million Dollars ($5,000,000) and
(ii) the aggregate amounts paid by Company or to be paid by Company under this
Agreement in a six (6) month period.
31.2 Exceptions to Sections 31.1.2 and 31.1.3.
31.2.1 The limitations on the nature and amount of the damages a Party may be
entitled to set forth in Sections 31.1.2 and 31.1.3 shall not apply in the case
of (a) a breach by a Party of Section 21 (Confidential Information), (b) a
breach by a Party of Section 19 (Proprietary Rights), (c) damages arising from
the Party’s willful misconduct or gross negligence, (d) a breach by a Party of
Section 7 (Compliance with Law), (e) a claim under Sections 24 and 25
(Indemnification and Special Rule for Infringement), or (f) damages incurred by
Company as a result of the wrongful termination or Abandonment by Vendor of this
Agreement or the Services in whole or in part.
31.3 Acknowledgment. The Parties expressly acknowledge that the limitations and
exclusions set forth above have been the subject of active and complete
negotiation between the Parties and represent the Parties’ agreement, taking
into account each Party’s level of risk associated with the performance or
nonperformance of its obligations under this Agreement and the payments and
other benefits to be derived by each Party pursuant to this Agreement. The
provisions of this Section 31 shall survive the expiration or termination of
this Agreement for any reason.
32. INSURANCE
32.1 General. Vendor shall obtain, pay for, and maintain in full force and
effect during the Term, reasonable and appropriate insurance including the
following, with each policy naming Company as an additional insured where
possible: (i) Statutory Workers’ Compensation coverage in the amount required by
applicable law, for all employees engaged in Services or operations under this
Agreement; (ii) commercial general liability insurance with limits not less than
seven million five hundred thousand dollars ($7,500,000) per occurrence; and
(iii) professional liability insurance (errors and omissions) with limits not
less than seven million five hundred thousand dollars ($7,500,000).
32.2 Proof of Insurance. Prior to the Effective Date, Vendor shall provide to
Company an original and one copy of a Certificate of Insurance certifying that
coverage as described in this Section has been obtained.
32.3 Subcontractors to be Insured. Vendor shall require all of its
subcontractors performing Services or any part of any Services to carry
insurance coverage and limits as agreed to and approved in writing by Company.
At a minimum, Vendor shall require of any subcontractor the same kinds of
insurance as for the Vendor and with per occurrence limits of not less than two
million dollars ($2,000,000).

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32.4 Notice of Cancellation. Vendor shall provide thirty (30) days’ prior
written notice to Company of a cancellation or change to any insurance policy
required under this Section 32. Should Vendor fail to keep in effect at all
times the insurance coverage required under this Section, Company may, in
addition to and cumulative with any other remedies available at law, equity, or
hereunder, acquire such insurance and deduct the cost thereof from its payments
to Vendor under this Agreement or terminate this Agreement for cause.
33. MISCELLANEOUS
33.1 Interpretation. This Agreement is the result of arm’s length negotiations
between the Parties and shall be construed to have been drafted by all Parties
such that any ambiguities in this Agreement shall not be construed against
either Party.
33.2 Assignment. Vendor shall not assign this Agreement without Company’s prior
written consent, which may be withheld by Company in its sole discretion.
Company shall not assign this Agreement without Vendor’s prior written consent,
which may be reasonably withheld by Vendor, provided, however, that Company may
assign this Agreement or any SOW without Vendor’s consent to any parent,
affiliate, sibling or subsidiary of Company, or pursuant to a change of control,
including a merger, reorganization, or sale of all or substantially all of the
assets of Company. This Agreement shall be binding on the Parties and their
respective successors and permitted assigns. Any assignment in violation of this
Section 33.2 shall be void.
33.3 Notices. All notices, requests, claims, demands, and other communications
(each a “Notice”) under the Agreement shall be in writing and shall be given or
made by delivery in person, by courier service, or by certified mail (postage
prepaid, return receipt requested) to the respective Party at the address set
forth below or at such other address as such Party may hereafter notify the
other Party in accordance with this Section 33.3.
For Company:
Unicare Life and Health Insurance Company
1 WellPoint Way
Thousand Oaks, CA 91362
Attention: Vice President, Strategic Sourcing
With a copy to:
Unicare Life and Health Insurance Company
1 WellPoint Way
Thousand Oaks, CA 91362
Attention: General Counsel
For Vendor:
APAC Customer Services, Inc.
Six Parkway North
Deerfield, IL 60015
Attention: Executive Vice President, Operations
With a copy to:
APAC Customer Services, Inc.
Six Parkway North
Deerfield, IL 60015
Attention: General Counsel

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33.4 No Unlawful Inducements. Vendor represents that it has not violated any
applicable laws or regulations regarding the offering of unlawful inducements in
connection with this Agreement. If at any time during the Term, Company
determines that the foregoing representation is inaccurate, then, in addition to
any other rights Company may have under this Agreement, at law or in equity,
Company shall have the right to terminate this Agreement for cause without
affording Company an opportunity to cure.
33.5 Counterparts. The Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one single agreement between the
Parties.
33.6 Independent Contractors. Nothing contained in this Agreement shall be
construed to make either Party a partner, joint venturer, principal, agent, or
employee of the other. No officer, director, employee, agent, affiliate, or
contractor retained by Vendor to perform work on Company’s behalf hereunder
shall be deemed to be an employee, agent, or contractor of Company. Neither
Party shall have any right, power, or authority, express or implied, to bind the
other. As Company is relying upon Vendor’s skills and experience in the
performance of the Services under this Agreement, Vendor alone shall be
responsible for supervising its personnel. Vendor is solely responsible for
payment of (a) all income, disability, withholding, and other employment taxes
as well as (b) all medical benefit premiums, vacation pay, sick pay, or other
fringe benefits resulting from Vendor’s retention of any such officers,
directors, employees, agents, or contractors.
33.7 Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be contrary to law, then the remaining provisions of
this Agreement or the application of such provision to persons or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each such provision of this Agreement shall be valid and
enforceable to the extent granted by law.
33.8 No Waiver. No delay or omission by either Party to exercise any right or
power it has under this Agreement shall impair or be construed as a waiver of
such right or power. A waiver by any Party of any breach or covenant shall not
be construed to be a waiver of any succeeding breach or any other covenant. All
waivers must be in writing and signed by the Party waiving its rights.
33.9 No Publicity. Neither Party shall use the other Party’s name, trademark,
service mark, logo, or refer to the other Party directly or indirectly in any
media release, public announcement, or public disclosure relating to this
Agreement or its subject matter, including in any promotional or marketing
materials, company lists or business presentations without the prior written
consent of the other Party.

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33.10 Entire Agreement. The Agreement, Statement(s) of Work, and each of the
Schedules and Exhibits, is the entire agreement between the Parties with respect
to its subject matter, and there are no other representations, understandings,
or agreements between the Parties relative to such subject matter.
33.11Amendments. No amendment to, or change, waiver, or discharge of, any
provision of this Agreement shall be valid unless in writing and signed by an
authorized representative of the Party against which such amendment, change,
waiver, or discharge is sought to be enforced.
33.12 Cumulative Remedies. Except as otherwise expressly provided in this
Agreement, all remedies provided for in this Agreement shall be cumulative and
in addition to, and not in lieu of, any other remedies available to either Party
at law, in equity or otherwise.
33.13 Survival. Section 20 (Company Data), Section 21 (Confidentiality),
Section 24 (Indemnification), Section 25 (Special Rule Regarding Infringement,
Section 26 (Representations and Warranties), and Section 31 (Limitation of
Liability) shall survive the expiration or termination of this Agreement in
whole or in part for any reason.
33.14 No Third Party Beneficiaries. This Agreement shall not benefit, or create
any right or cause of action in or on behalf of, any person or entity other than
Company (including its business units, affiliates, subsidiaries and assignees)
or Vendor.
33.15 Further Acts. Subsequent to the execution and delivery of this Agreement,
and without any additional consideration, each of Company and Vendor shall
execute and deliver any further legal instruments and perform any acts which are
or may become necessary to effectuate the purposes of this Agreement.

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IN WITNESS WHEREOF, Company and Vendor have executed this Agreement as of the
Effective Date,

                Unicare Life & Health Insurance Company,
a Delaware corporation  
 
         
 
  By:   /s/ Sandra Van Trevse  
 
         
 
  Name: Sandra Van Trevse  
 
  Title: President & CEO  
 
              APAC Customer Services, Inc., an Illinois corporation  
 
         
 
  By:   /s/ George L. Puig  
 
         
 
  Name: George L. Puig  
 
  Title: Executive Vice President  
 
         
 
  By:   /s/ Marc Tanenberg  
 
         
 
  Name: Marc Tanenberg  
 
  Title: CFO  

      WellPoint — APAC Agreement   August 10, 2004

 

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