Filed by Bowne Pure Compliance



 





[*] 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.



			
	 	 	 
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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.



			
	 	 	 
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	 	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.



			
	 	 	 
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	 	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.




			
	 	 	 
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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
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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.



			
	 	 	 
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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.



			
	 	 	 
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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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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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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.



			
	 	 	 
	WellPoint — APAC Agreement
	 	August 10, 2004






 


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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.



			
	 	 	 
	WellPoint — APAC Agreement
	 	August 10, 2004







 


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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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