Document:

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                                                                     EXHIBIT 4.8

                                THIRD AMENDMENT
                                     TO THE
             OILFIELD SERVICES DIVISION SAVINGS AND INVESTMENT PLAN

ICO Worldwide, Inc. (the "Employer") having heretofore adopted the Oilfield
Services Division Savings and Investment Plan, a prototype plan document
consisting of the Plan Agreement #001 and the Putnam Basic Plan Document #07
(the "Plan") effective as of April 3, 2000, pursuant to the power reserved to
the Employer in Section 17.1 of the Plan, hereby amends the Plan Agreement as
set forth below.

1. Subsection A., B., C., and E. of Section 1., of the Plan Agreement are hereby
   amended effective August 30, 2002, by striking said subsection in their
   entirety and by substituting the following new paragraphs in lieu thereof:

         "A.      Employer Name:    ICO Technology, Inc.

          B.      Employer Identification Number:  22-3439360

          C.      Employer Address:  5333 Westheimer Road

                                     Suite 600

                                     Houston, TX 77056

          E.      Employer Contact: Name:      Charlotte J. Fischer

                                    Title:     General Counsel & Secretary

                                    Phone #:   713-351-4100"

2. Subsection A. of Section 3., of the Plan Agreement is hereby amended
   effective August 30, 2002, by striking said subsection in its entirety and by
   substituting the following new paragraph in lieu thereof:

         "A.      Classes of Eligible Employees. The Plan will cover all
                  employees who have met the age and service requirements with
                  the following exclusions:

                  [ ]  (1)  No exclusions. All job classifications will be
                            eligible.

                  [ ]  (2)  The Plan will exclude employees in a unit of
                            Employees covered by a collective bargaining
                            agreement with respect to which retirement benefits
                            were the subject of good faith bargaining, with the
                            exception of the following collective bargaining
                            units, which will be included: ___

                  [ ]  (3)  The Plan will exclude employees who are non-resident
                            aliens without U.S. source income.

                  [ ]  (4)  Employees of the following Affiliated Employers
                            (specify):

                            -------

                            -------

                  [X]  (5)  Leased Employees

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         [X] (6)  Employees in the following other classes (specify):

                  Employees of the Petrochemical Division

                  Employees of the Mineral Division"

3. Subsection A.(1) of Section 7., of the Plan Agreement is hereby amended
   effective August 30, 2002 by striking said subsection in its entirety and by
   substituting the following new paragraph in lieu thereof:

    "A.  Amount.

         (1)      Elective Deferrals and Employer Matching Contributions.
                  Compensation for the purposes of determining the amount and
                  allocation of Elective Deferrals and Employer Matching
                  Contributions will be determined as follows (choose either(a)
                  or (b), and (c) and/or (d) as applicable).

                  [X] (a)  Compensation will include Form W-2 earnings as
                           defined in Section 2.8 of the Plan.

                  [ ] (b)  Compensation will include all compensation included
                           in the definition of Code Section 415 Compensation in
                           Plan Section 6.5(b) of the Plan.

                  [X] (c)  In addition to the amount provided in either (a) or
                           (b) above, Compensation will also include any amounts
                           withheld from the employee under a 401(k) plan,
                           cafeteria plan, SARSEP, tax sheltered 403(b)
                           arrangement, or Code Section 414(h)(2) that are
                           picked up by a governmental employer.

                  [X] (d)  Compensation will also exclude the following amount
                           (choose each that applies):

                           [ ]  (i) overtime pay.

                           [X]  (ii) bonuses.

                           [ ]  (iii) commissions.

                           [X]  (iv) other pay (describe): Car allowances

                           [ ]  (v) compensation in excess of $ ______"

4. Subsection A. of Section 11., of the Plan Agreement is hereby amended
   effective August 30, 2002, by striking said subsection in its entirety and by
   substituting the following new paragraph in lieu thereof:

    "A.  Plan Administrator (Plan Section 15.1). You may appoint a person or a
         committee to serve as Plan Administrator. If you do not appoint a Plan
         Administrator, the Plan provides that the Employer will be the Plan
         Administrator.

         The initial Plan Administrator will be (check one):

         [ ] This person: ___

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                  [ ]      A committee composed of these people:

                           ---------

                           ---------
                                    "
                           ---------

5. In all other respects, the Plan provisions remain in full force and effect.

IN WITNESS, WHEREOF, the Employer has caused the Third Amendment to the Plan to
be duly executed in its name and behalf and its corporate seal to be affixed as
of the date signed below.

ICO WORLDWIDE L.P.                          PUTNAM FIDUCIARY TRUST COMPANY
(formerly ICO Worldwide, Inc.)

By: /s/ JON C. BIRO                         By: /s/ TINA A. CAMPBELL
   ---------------------------                 ---------------------------------
Print Name: Jon C. Biro                     Print Name: Tina A. Campbell
           -------------------                         -------------------------
Title: General Manager                      Title: SVP Compliance & Consulting
      ------------------------                    ------------------------------
Date: Sept. 27, 2002                        Date: 10/2/02
     -------------------------                   -------------------------------<PAGE>

                                                                   EXHIBIT 10.12

CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
has been marked with a double asterisk within brackets to denote where omissions
have been made. The confidential material has been filed separately with the
Commission.

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                           MASTER SERVICES AGREEMENT

                                     BETWEEN

                            EMPIRE HEALTHCHOICE, INC.

                                       AND

                  INTERNATIONAL BUSINESS MACHINES CORPORATION

                                      DATED

                                  JUNE 1, 2002

                                                         Empire/IBM CONFIDENTIAL

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                                TABLE OF CONTENTS

1.    BACKGROUND AND OBJECTIVES................................................1
  1.1     Background...........................................................1
  1.2     Objectives...........................................................1
  1.3     Construction.........................................................2

2.    DEFINITIONS..............................................................2
  2.1     Certain Definitions..................................................2
  2.2     Other Terms.........................................................10

3.    SERVICES................................................................10
  3.1     Provision of Services...............................................10
  3.2     Overview of Services................................................12

4.    TERM....................................................................12
  4.1     Term................................................................12
  4.2     Extension...........................................................13

5.    IBM PERSONNEL...........................................................13
  5.1     Key IBM Positions...................................................13
  5.2     Transitioned Personnel..............................................14
  5.3     Qualifications, Retention and Replacement of IBM Personnel..........15
  5.4     Compliance With Empire Policies.....................................16

6.    EQUIPMENT AND THIRD PARTY SERVICE CONTRACTS.............................16
  6.1     Generally...........................................................16
  6.2     Existing Equipment..................................................17
  6.3     Equipment Acquisitions During the Term..............................18
  6.4     Removal and Disposal of Equipment...................................18
  6.5     Third Party Service Contracts.......................................18
  6.6     Special Terms.......................................................20

7.    SOFTWARE AND PROPRIETARY RIGHTS.........................................21
  7.1     Empire Software.....................................................21
  7.2     IBM Software........................................................21
  7.3     Third Party Software................................................25
  7.4     Rights in Newly Developed Software and Other Materials..............30
  7.5     Patent Applications and Patent Infringement Claims..................32
  7.6     Residual Knowledge..................................................33
  7.7     Export..............................................................34

8.    FACILITIES..............................................................34
  8.1     General.............................................................34
  8.2     Staten Island Data Center...........................................36
  8.3     IBM Facility in India...............................................37
  8.4     Disaster Recovery Sites.............................................37
  8.5     Empire Obligations..................................................38
  8.6     IBM Obligations.....................................................39
  8.7     Migration...........................................................39

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9.    PERFORMANCE STANDARDS...................................................41
  9.1     General.............................................................41
  9.2     Failure to Perform..................................................41
  9.3     Periodic Reviews....................................................43
  9.4     Measurement and Monitoring Tools....................................43
  9.5     Customer Survey.....................................................43

10.   PROJECT AND CONTRACT MANAGEMENT.........................................43
  10.1    Governance Board....................................................43
  10.2    Reports and Meetings................................................44
  10.3    Procedures Manual...................................................45
  10.4    Change Control......................................................46
  10.5    Use of Subcontractors and Other Support.............................47
  10.6    Technology Plan.....................................................48
  10.7    Quality Assurance and Improvement Programs..........................49
  10.8    Premier Customer Status.............................................49

11.   AUDITS..................................................................49
  11.1    Audit Rights........................................................49
  11.2    Audit Follow-up.....................................................51
  11.3    Audit Costs.........................................................51
  11.4    Records Retention...................................................51

12.   CUSTOMER RESPONSIBILITIES...............................................52
  12.1    Responsibilities....................................................52
  12.2    Savings Clause......................................................52

13.   CHARGES.................................................................53
  13.1    General.............................................................53
  13.2    Pass-Through Expenses...............................................53
  13.3    Incidental Expenses.................................................54
  13.4    Taxes...............................................................54
  13.5    Extraordinary Events................................................56
  13.6    New Services........................................................57
  13.7    Benchmarks..........................................................58
  13.8    [**]................................................................60

14.   INVOICING AND PAYMENT...................................................60
  14.1    Invoicing...........................................................60
  14.2    Payment Due.........................................................61
  14.3    Accountability......................................................62
  14.4    Proration...........................................................62
  14.5    Refundable Items....................................................62
  14.6    Set Off.............................................................62
  14.7    Disputed Charges....................................................62

15.   SAFEGUARDING OF DATA; CONFIDENTIALITY...................................63
  15.1    Empire Information..................................................63
  15.2    Safeguarding Empire Data............................................64
  15.3    Confidentiality.....................................................64
  15.4    HIPAA Privacy and Security Requirements.............................67
  15.5    HIPAA Transactions Rule.............................................70

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  15.6    HIPAA Security Rule.................................................70
  15.7    Other HIPAA Administrative Simplification Regulations...............70

16.   REPRESENTATIONS AND WARRANTIES..........................................70
  16.1    Work Standards, Efficiency and Cost Effectiveness...................70
  16.2    Maintenance.........................................................70
  16.3    Technology..........................................................71
  16.4    Non-Infringement....................................................71
  16.5    Authorization and Other Contracts...................................71
  16.6    Inducements.........................................................72
  16.7    Viruses.............................................................72
  16.8    Disabling Code......................................................73
  16.9    Deliverables........................................................73
  16.10   SEI/CMM Level 5.....................................................73
  16.11   Disclaimer..........................................................75

17.   INSURANCE...............................................................75
  17.1    Insurance Coverage..................................................75
  17.2    Insurance Terms.....................................................76

18.   INDEMNITIES.............................................................77
  18.1    Indemnity by IBM....................................................77
  18.2    Indemnity by Empire.................................................80
  18.3    Additional Indemnities..............................................81
  18.4    Procedures With Respect to Indemnities..............................82
  18.5    Infringement........................................................82
  18.6    Indemnification Procedures..........................................82
  18.7    Subrogation.........................................................83

19.   LIABILITY...............................................................84
  19.1    General Intent......................................................84
  19.2    Liability Restrictions..............................................84
  19.3    Force Majeure.......................................................86

20.   DISPUTE RESOLUTION......................................................87
  20.1    Informal Dispute Resolution.........................................87
  20.2    Litigation..........................................................88
  20.3    Continued Performance...............................................88
  20.4    Governing Law.......................................................88
  20.5    Customer Claims.....................................................88
  20.6    Waiver of Right to Jury Trial.......................................89

21.   TERMINATION.............................................................89
  21.1    Termination for Cause...............................................89
  21.2    Termination for Material Infringement or Breach of Confidentiality..89
  21.3    Termination for Convenience.........................................90
  21.4    Termination Upon Change of Control..................................90
  21.5    Termination Due To Force Majeure Event..............................91
  21.6    Termination Due To IBM's Financial Inability To Perform.............91
  21.7    Additional Termination Rights.......................................91
  21.8    Charges Upon Partial Termination....................................91
  21.9    Extension of Termination/Expiration Effective Date..................91

                                      -iii-              Empire/IBM CONFIDENTIAL

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  21.10   Termination/Expiration Assistance...................................92

22.   COMPLIANCE WITH LAWS....................................................97
  22.1    Compliance with Laws and Regulations Generally......................97
  22.2    Gramm-Leach-Bliley Act and Similar Laws.............................97
  22.3    Hazardous Products or Components....................................97
  22.4    Equal Employment Commitments........................................98

23.   GENERAL.................................................................98
  23.1    Binding Nature and Assignment.......................................98
  23.2    Entire Agreement; Amendment.........................................99
  23.3    Mutually Negotiated.................................................99
  23.4    Notices.............................................................99
  23.5    Counterparts.......................................................100
  23.6    Headings...........................................................100
  23.7    Relationship of Parties............................................100
  23.8    Severability.......................................................100
  23.9    Consents and Approval..............................................100
  23.10   Waiver of Default; Cumulative Remedies.............................101
  23.11   Survival...........................................................101
  23.12   Public Disclosures.................................................101
  23.13   Service Marks......................................................101
  23.14   Third Party Beneficiaries..........................................101
  23.15   Nonsolicitation of Employees.......................................101
  23.16   Intentionally Left Blank...........................................102
  23.17   Intentionally Left Blank...........................................102
  23.18   Covenant of Good Faith.............................................102

                                      -iv-               Empire/IBM CONFIDENTIAL

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                                    SCHEDULES

Schedule A-1:     Core Applications Services
Schedule A-2:     Data Center Services
Schedule A-3:     Help Desk Services
Schedule A-4:     Telecommunications Connectivity Services
Schedule A-5:     Modernization Services
Schedule B:       Service Levels
Schedule B-1:     Definitions
Schedule B-2:     Critical Service Levels
Schedule B-3:     Core Applications Service Levels
Schedule B-4:     Data Center Service Levels
Schedule B-5:     Help Desk Service Levels
Schedule B-6:     Telecommunications Service Levels
Schedule B-7      Systems Integration Service Levels
Schedule B-8      Transition Service Levels
Schedule C:       Charges
Schedule D:       Employment
Schedule D-1:     Affected Employees
Schedule D-2:     Key Transitioned Employees
Schedule D-3:     Key IBM Positions
Schedule E:       Third Party Service Contracts
Schedule E-1:     Core Applications Third Party Service Contracts
Schedule E-2:     Data Center Third Party Service Contracts
Schedule E-3:     Help Desk Third Party Service Contracts
Schedule F:       Existing Equipment
Schedule F-1:     Core Applications Existing Equipment
Schedule F-2:     Data Center Existing Equipment
Schedule F-3:     Help Desk Existing Equipment
Schedule F-4:     Former NexxtHealth Existing Equipment
Schedule F-5:     Telecommunications Connectivity Existing Equipment
Schedule G:       Existing Software
Schedule G-l A:   Core Applications Applications Software
Schedule G-2 A:   Data Center Applications Software
Schedule G-3 A:   Help Desk Applications Software
Schedule G-1 S:   Core Applications Systems Software
Schedule G-2 S:   Data Center Systems Software
Schedule G-3 S:   Help Desk Systems Software

                                       -v-               Empire/IBM CONFIDENTIAL

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Schedule H:       Overall Migration Plan
Schedule I:       Termination/Expiration Assistance
Schedule J:       Equipment and Software Responsibility Allocation Matrices
Schedule K:       Reports
Schedule K-1:     Core Applications Reports
Schedule K-2:     Data Center Reports
Schedule K-3:     Help Desk Reports
Schedule L:       Approved Subcontractors
Schedule M:       Empire Competitors
Schedule N-1:     Empire Code of Business Conduct
Schedule N-2:     Empire Corporate Compliance Program
Schedule O-1:     Equal Employment Commitment -- Medicare
Schedule O-2:     Equal Employment Commitment -- Non-Medicare
Schedule P:       Intentionally Left Blank
Schedule Q:       Intentionally Left Blank
Schedule R:       Form of Bill of Sale
Schedule S:       India Facility Specifications

                                      -vi-               Empire/IBM CONFIDENTIAL

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                            MASTER SERVICES AGREEMENT

This Master Services Agreement, effective as of June 1, 2002 (the "Effective
Date"), is entered into by and between Empire HealthChoice, Inc. d/b/a Empire
Blue Cross and Blue Shield, a New York corporation with its corporate
headquarters located at 11 W. 42nd Street, New York, New York 10036 ("Empire"),
an independent licensee of the Blue Cross and Blue Shield Association, and
International Business Machines Corporation, a New York corporation with its
headquarters located at New Orchard Road, Armonk, New York 10504 ("IBM"). As
used in this Agreement, "Party" means either Empire or IBM, as appropriate, and
"Parties" means Empire and IBM. The Parties agree that the following terms and
conditions shall apply to the services to be provided by IBM under this
Agreement in consideration of certain payments to be made by Empire.

1.   BACKGROUND AND OBJECTIVES

1.1  Background.

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

     (a)  Empire desires to outsource to IBM certain services currently
          performed by Empire, in order to generate savings (a key element of
          generating these savings to Empire is the utilization of IBM Personnel
          in India), which savings will be used in part in connection with the
          Claims Engine, as defined below, and modernization of Empire's other
          core applications.

     (b)  IBM desires to license the new Claims Engine to Empire, and Empire
          desires to utilize such Claims Engine as its primary insurance claims
          processing product.

     (c)  Empire desires to license the Portal Toolkits and Framework Software
          to IBM, in return for credits earned from IBM's sale of such software
          and related products based on such software.

     (d)  The Parties desire to mutually enter into a structure allowing future
          joint development of health care products.

     (e)  Having reached agreement on contract terms, the Parties are entering
          into the following agreements to memorialize the terms and conditions
          under which the foregoing shall be consummated and provided: (i) the
          Claims Engine License Agreement, (ii) the Licensing and Joint
          Development Agreement, and (iii) this Master Services Agreement.

1.2  Objectives.

     Empire and IBM have agreed upon the following specific goals and objectives
     for this Agreement and intend to meet these goals by performing in
     accordance with the terms of this Agreement:

     (a)  Create a valued relationship between Empire and IBM whereby IBM
          remains knowledgeable and an active participant in Empire's business
          and remains committed to the business success of Empire;

                                                         Empire/IBM CONFIDENTIAL

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     (b)  Pursue new technical functionality and capabilities, in order to
          modernize Empire's core business systems;

     (c)  Initially provide services at least at the same level as Empire was
          providing such services (where data exists to reasonably substantiate
          such prior performance) and for IBM to annually improve certain
          Service Levels and identify ways to reduce costs;

     (d)  Provide to Empire on a long-term basis quality, flexible information
          technology services in the areas identified in this Agreement in a
          cost-effective manner;

     (e)  Create a flexible relationship between Empire and IBM (i) under which
          IBM will be highly responsive to Empire's requirements and to changes
          in technology and methods for providing technology services, and (ii)
          which accommodates changes in volumes of operation, new generations of
          technology, and improved methods of monitoring, measuring and
          achieving increased levels of service;

     (f)  Suggest opportunities that will allow Empire to obtain the benefits
          that IBM can bring in leveraging other strategic partners and vendors;
          and

     (g)  Provide a program for winding down this Agreement at its termination
          or expiration, including cooperation to support the transition of the
          services provided by IBM under this Agreement back to Empire or to a
          third party designated by Empire.

1.3  Construction.

     The provisions of this Article 1 are intended to be a general introduction
     to this Agreement and are not intended to expand the scope of the Parties'
     obligations under this Agreement or to alter the plain meaning of the terms
     and conditions of this Agreement. However, to the extent the terms and
     conditions of this Agreement do not address a particular circumstance or
     are otherwise unclear or ambiguous, such terms and conditions are to be
     interpreted and construed so as to give full effect to the provisions in
     this Article 1.

2.   DEFINITIONS

2.1  Certain Definitions.

     As used in this Agreement:

     (a)  "Affected Employees" shall have the meaning given in Section 5.2(a).

     (b)  "Affected Party" shall have the meaning given in Section 21.2.

     (c)  "Affiliate" shall mean, with respect to any entity, any other entity
          Controlling, Controlled by or under common Control with such entity.

     (d)  "Agreement" shall mean this Master Services Agreement, including its
          schedules, exhibits, and appendices, as the same may be amended by the
          Parties from time to time in accordance with Section 23.2.

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     (e)  "Applications Software" or "Applications" shall mean those programs
          and programming (including the supporting documentation, media,
          on-line help facilities and tutorials) that perform specific data
          processing and telecommunications tasks in connection with the
          Services. Applications Software in use as of the Effective Date
          includes the Software identified as such in Schedules G-1 A, G-2 A,
          and G-3 A.

     (f)  "Assets" shall have the meaning given in Article 6.

     (g)  "Benchmarker" shall have the meaning given in Section 13.7(a).

     (h)  "Business Associate" shall have the meaning given in Section
          15.4(a)(iv).

     (i)  "Business Day" shall mean every day Monday through Friday, other than
          those holidays when Empire's corporate headquarters is not open for
          business.

     (j)  "Capability Maturity Model" shall have the meaning given in Section
          16.10.

     (k)  "Change Control Procedure" shall have the meaning given in Section
          10.4(d).

     (l)  "Claims Engine" shall mean the "Licensed Software" (as defined in the
          Claims Engine License Agreement), licensed from IBM by Empire pursuant
          to the Claims Engine License Agreement.

     (m)  "Claims Engine License Agreement" shall mean that certain Software
          License and Support Agreement by and between the Parties executed
          concurrently with this Agreement.

     (n)  "CMM" shall have the meaning given in Section 16.10.

     (o)  "Commercially-Provided Disabling Code" shall have the meaning given in
          Section 16.8.

     (p)  "Commercially Reasonable Efforts" shall mean taking such steps and
          performing in such a manner as a well managed IT outsourcing company,
          in the case of IBM, or a well managed health insurance company, in the
          case of Empire, would undertake under similar circumstances where such
          company was acting in a determined, prudent and reasonable manner to
          achieve a particular desired result.

     (q)  "Confidential Information" shall have the meaning given in Section
          15.3(a).

     (r)  "Control" and its derivatives shall mean possessing, directly or
          indirectly, the power to direct or cause the direction of the
          management policies or operations of an entity, whether through
          ownership of voting securities, by contract or otherwise.

     (s)  "Core Applications Services" shall mean the Services provided by IBM
          pursuant to Schedule A-1, including applications development,
          applications integration, and applications maintenance Services.

     (t)  "Covered Entity" shall have the meaning given in Section 15.4(a)(iii).

                                      -3-                Empire/IBM CONFIDENTIAL

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     (u)  "Data Center Services" shall mean the Services provided by IBM
          pursuant to Schedule A-2, including mainframe, midrange and server
          Services.

     (v)  "Developed Empire Software" shall have the meaning given in Section
          7.4(b).

     (w)  "Disabling Code" shall have the meaning given in Section 16.8.

     (x)  "Dispute Date" shall have the meaning given in Section 20.1(a)(i).

     (y)  "Effective Date" shall have the meaning given in the preamble to the
          Agreement.

     (z)  "e-Health Utility Facility" shall have the meaning given in Section
          8.3(b).

     (aa) "Empire" shall have the meaning given in the preamble to the
          Agreement.

     (bb) "Empire Auditors" shall have the meaning given in Section 11.1(a).

     (cc) "Empire Competitors" shall mean those entities listed in Schedule M,
          as such Schedule M may be reasonably updated by Empire from time to
          time.

     (dd) "Empire Contract Executive" shall have the meaning given in Section
          12.1(a).

     (ee) "Empire Data" shall mean all information, whether or not Confidential
          Information, entered in Software or Equipment by or on behalf of
          Empire and information derived from such information, including as
          stored in or processed through the Equipment or Software.

     (ff) "Empire Facilities" shall mean the facilities, including the space,
          equipment, furnishings and fixtures located therein, owned or leased
          by Empire and provided to IBM in order for IBM to provide the
          Services. The term "Empire Facilities" shall not include the Staten
          Island Data Center.

     (gg) "Empire Information" shall mean all information, in any form,
          furnished or made available directly or indirectly to IBM by Empire or
          otherwise obtained by IBM from Empire. Such information first provided
          by IBM or its suppliers to Empire hereunder shall not be deemed to be
          Empire Information.

     (hh) "Empire Non-Software Materials" shall have the meaning given in
          Section 7.4(c).

     (ii) "Empire Software" shall mean Software owned by Empire. As of the
          Effective Date, Empire Software includes the Software identified as
          such in Schedule G for Applications Software and Systems Software.

     (jj) "Employment Start Date" shall have the meaning given in Schedule D.

     (kk) "End Users" shall mean users of the Services.

     (11) "Equipment" shall mean the computer and telecommunications equipment
          (without regard to the entity owning or leasing such equipment) used
          by IBM to provide the Services. Equipment includes the following: (i)
          computer equipment, including

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          associated attachments, features, accessories, peripheral devices,
          front end devices, and other computer equipment, and including direct
          access storage devices ("DASD"); and (ii) on IBM's side of the
          demarcation points provided in the Telecommunications Connectivity
          Schedule: telecommunications equipment, including multiplexors,
          modems, CSUs/DSUs, hubs, bridges, routers, switches and other
          telecommunications equipment.

     (mm) "Escrow Cap" shall have the meaning given in Section 14.7(d).

     (nn) "Escrow Threshold" shall have the meaning given in Section 14.7(c).

     (oo) "Existing Equipment" shall mean Equipment owned or leased by Empire as
          of the Effective Date and that was being utilized by Empire
          immediately prior to the Effective Date in performing functions that
          form part of the Services. Existing Equipment includes the Equipment
          identified as such in Schedule F.

     (pp) "Existing Leased Equipment" shall mean Existing Equipment leased by
          Empire immediately prior to the Effective Date.

     (qq) "Existing Owned Equipment" shall mean Existing Equipment owned by
          Empire immediately prior to the Effective Date.

     (rr) "Existing Systems Software" shall mean Systems Software licensed by
          Empire as of the Effective Date and that was being utilized by Empire
          immediately prior to the Effective Date in performing functions that
          form part of the Services.

     (ss) "Existing Third Party Systems Software" shall mean Third Party Systems
          Software licensed from one or more third parties by Empire as of the
          Effective Date and that was being utilized by Empire immediately prior
          to the Effective Date in performing functions that form part of the
          Services, including the Software identified as such in Schedules G-1
          S, G-2 S and G-3 S.

     (tt) "Extraordinary Event" shall have the meaning given in Section 13.5(a).

     (uu) "Framework Software" shall have the meaning given in the Licensing and
          Joint Development Agreement.

     (vv) "Generally Available Software" shall mean software (i) that is
          available to the general public under standard terms and conditions,
          (ii) for which the applicable software vendor provides ongoing
          maintenance and updates, and (iii) that is available at standard
          prices offered to the public. "Generally Available IBM Software" shall
          mean IBM Software that is Generally Available Software. "Generally
          Available Third Party Systems Software" shall mean Third Party Systems
          Software that is Generally Available Software.

     (ww) "Governance Board" shall have the meaning given in Section 10.1.

     (xx) "Help Desk Services" shall mean the Services provided by IBM pursuant
          to Schedule A-3.

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     (yy) "IBM" shall have the meaning given in the preamble to the Agreement.

     (zz) "IBM Logoed Equipment" shall mean the Equipment manufactured by or on
          behalf of IBM or its Affiliates and marketed under the name of IBM or
          its Affiliates.

     (aaa) "IBM Migration Manager" shall have the meaning given in Section
          8.7(b).

     (bbb) "IBM Personnel" shall mean employees of IBM and its approved
          subcontractors assigned to perform the Services pursuant to this
          Agreement.

     (ccc) "IBM Project Executive" shall have the meaning given in Section
          5.1(a).

     (ddd) "IBM Service Delivery Tools" shall mean non-commercially available
          service delivery tools used by IBM to assist in the delivery of the
          Services. IBM Service Delivery Tools shall not include software
          development tools or other software which is integral to or part of
          the Services or the operations. Examples of IBM Service Delivery Tools
          are HelpNow and Asset Manager.

     (eee) "IBM Software" shall mean the Software that is owned by IBM or its
          Affiliates, or marketed in the name of IBM as the vendor.

     (fff) "IBM Systems Software" shall mean Systems Software that is IBM
          Software.

     (ggg) "Including" and its derivatives (such as "include" and "includes")
          shall mean including without limitation. This term is as defined,
          whether or not capitalized in this Agreement.

     (hhh) "Initial Efforts" shall have the meaning given in Section 16.7(a).

     (iii) "Invention" shall have the meaning given in Section 7.4(d)(ii).

     (jjj) "IT" shall mean information technology.

     (kkk) "Key Transitioned Employees" shall have the meaning given in Section
          5.2(b).

     (111) "Key IBM Positions" shall have the meaning given in Section 5.1(a).

     (mmm) "Licensing and Joint Development Agreement" shall mean that certain
          Licensing and Joint Development Agreement by and between the Parties
          executed concurrently with this Agreement.

     (nnn) "Life" ("Lives") shall mean any individual(s) covered by a benefit
          plan insured or administered by Empire (including insurance companies,
          self-insured employees, buying cooperatives, and unions) or any Empire
          Affiliate.

     (ooo) "Losses" shall mean all losses, liabilities, damages and claims, and
          all related costs and expenses (including reasonable legal fees and
          disbursements and costs of investigation, litigation, settlement,
          judgment, interest and penalties).

     (PPP) "Managed Operations Services" shall have the meaning given in Section
          3.2.

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     (qqq) "Migration" shall have the meaning given in Section 8.7(a).

     (rrr) "Migration Completion Dates" shall have the meaning given in Section
          8.7(i).

     (sss) "Migration Plan" shall have the meaning given in Section 8.7(c).

     (ttt) "Migration Services" shall have the meaning given in Section 8.7(a).

     (uuu) "Modernization Services" shall mean the Services provided by IBM
          pursuant to Schedule A-5.

     (vvv) "Monthly Performance Report" shall have the meaning given in Section
          10.2(a)(i).

     (www) "New Services" shall have the meaning given in Section 13.6.

     (xxx) "Non-Software Materials" shall have the meaning given in Section
          7.4(c).

     (yyy) "Notice of Election" shall have the meaning given in Section 18.6(a).

     (zzz) "Out-of-Pocket Expenses" shall mean reasonable, demonstrable and
          actual out-of-pocket expenses incurred by IBM for equipment,
          materials, supplies or services provided to or for Empire as
          identified in this Agreement, but not including IBM's overhead costs
          (or allocations thereof), administrative expenses or other mark-ups.

     (aaaa) "Party" and "Parties" shall have the meaning given in the preamble
          to the Agreement.

     (bbbb) "Pass-Through Expenses" shall have the meaning given in Section
          13.2(a).

     (cccc) "Performance Standards" shall mean, individually and collectively,
          the quantitative and qualitative performance standards and commitments
          for the Services specified in this Agreement, including Service
          Levels.

     (dddd) "Pre-Existing Empire Intellectual Property" shall have the meaning
          given in Section 7.1(b).

     (eeee) "Pre-Existing IBM Intellectual Property" shall have the meaning
          given in Section 7.2(b).

     (ffff) "Portal Toolkits" shall have the meaning given in the Licensing and
          Joint Development Agreement.

     (gggg) "Procedures Manual" shall mean the standards and procedures manual
          described in Section 10.3.

     (hhhh) "Privacy Rule" shall have the meaning given in Section 15.4(a)(i).

     (iiii) "Protected Health Information" or "PHI" shall have the meaning given
          in Section 15.4(a)(ii).

     (jjjj) "Required Consents" shall mean such consents (i) as may be required
          for the assignment to IBM, or the grant to IBM of rights of use, of
          resources otherwise provided for in this

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          Agreement, or (ii) as may be required to grant to Empire or its
          designee the rights set forth in this Agreement, to be effective after
          the expiration or termination of this Agreement or of any of the
          Services.

     (kkkk) "Residuals" shall mean those ideas, concepts, know-how, and
          techniques related to information in non-tangible form which is
          retained in the unaided memories of the employees of a Party and which
          such Party individually or jointly, develops, discloses or learns
          under this Agreement.

     (1111) "Revenue Sharing Credits" shall have the meaning given in the
          Licensing and Joint Development Agreement.

     (mmmm) "Security Rule" shall have the meaning given in Section 15.6.

     (nnnn) "SEI" shall have the meaning given in Section 16.10.

     (oooo) "Service Levels" shall have the meaning given in Section 9.1.

     (pppp) "Service Commencement Date" shall have the meaning given in Section
          3.1(h).

     (qqqq) "Service Recipients" shall have the meaning given in Section 3.1(f).

     (rrrr) "Services" shall have the meaning given in Section 3.1(a).

     (ssss) "SMT" shall have the meaning given in Section 10.2(b)(vi).

     (tttt) "Software" shall mean Applications Software and Systems Software
          unless a more specific reference is required.

     (uuuu) "Staten Island Data Center" shall mean that certain data center
          located at 10 Teleport Drive, Staten Island, New York, from which
          Empire provided data center services prior to the Effective Date.

     (vvvv) "Staten Island Data Center Sublease" shall have the meaning given in
          Section 8.2.

     (wwww) "Straddle Agreements" shall mean Third Party Service Contracts,
          leases of Equipment, and licenses for Third Party Software existing on
          the Effective Date and utilized by Empire, including enterprise
          agreements, which relate both to the Services and to assets and
          activities retained by Empire that do not form a part of the Services.

     (xxxx) "Systems Engineering Institute" shall have the meaning given in
          Section 16.10.

     (yyyy) "Systems Software" shall mean those programs and programming
          (including the supporting documentation, media, on-line help
          facilities and tutorials) that perform (i) tasks basic to the
          functioning of the Equipment and which are required to operate the
          Applications Software; or (ii) tasks, other than as performed by
          Applications Software, otherwise supporting the provision of the
          Services by IBM. If programs and programming supporting the Services
          are not IBM Service Delivery Tools or Applications Software, they
          shall be deemed to be Systems Software. Systems Software includes
          mainframe and mid-range operating systems, server operating systems,
          network

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          operating systems, systems utilities (including measuring and
          monitoring tools but excluding IBM Service Delivery Tools), data
          security software, middleware, telecommunications monitors, database
          management systems, and database management software (e.g., Oracle).
          Systems Software in use as of the Effective Date includes the Software
          identified as such in Schedules G-1 S, G-2 S, and G-3 S.

     (zzzz) "Targeted Cost Increases" shall have the meaning given in Section
          13.5(b)(i).

     (aaaaa) "Targeted Cost Reductions" shall have the meaning given in Section
          13.5(b)(i).

     (bbbbb) "Targeted Resource Additions" shall have the meaning given in
          Section 13.5(b)(i).

     (ccccc) "Targeted Resource Reductions" shall have the meaning given in
          Section 13.5(b)(i).

     (ddddd) "Technology Plan" shall have the meaning given in Section 10.6.

     (eeeee) "Telecommunications Connectivity Services" shall mean the Services
          provided by IBM pursuant to Schedule A-4.

     (fffff) "Term" shall have the meaning given in Section 4.1.

     (ggggg) "Termination/Expiration Assistance" shall have the meaning given
          in Section 21.10(a).

     (hhhhh) "Third Party Service Contracts" shall mean those agreements
          pursuant to which a third party was, immediately prior to the
          Effective Date, furnishing or providing services to Empire similar to
          the Services. Third Party Service Contracts include those contracts
          identified in Schedule E. Certain other Third Party Service Contracts
          are listed in Schedules F and G, and are addressed in Section 6.5(b).

     (iiiii) "Third Party Software" shall mean Software that is not IBM Software
          or Empire Software. "Third Party Applications Software" shall mean
          Third Party Software that is Applications Software. "Third Party
          Systems Software" shall mean Third Party Software that is Systems
          Software.

     (jjjjj) "Top Ten Percent" shall have the meaning given in Section 13.7(d).

     (kkkkk) "Tower" shall have the meaning given in Section 3.2.

     (11111) "Tower Migration Manager" shall have the meaning given in Section
          8.7(b).

     (mmmmm) "Transactions Rule" shall have the meaning given in Section 15.5.

     (nnnnn) "Transitioned Employees" shall have the meaning given in Section
          5.2(a).

     (ooooo) "Unidentified Resources" shall have the meaning given in Section
          6.6(b)(ii).

     (ppppp) "Use" shall mean, in the context of Software, to use, copy,
          maintain, modify, enhance, distribute or create derivative works.

     (qqqqq) "Virus" shall have the meaning given in Section 16.7.

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     (rrrrr) "Wind Down Costs" shall have the meaning given in Schedule C.

2.2  Other Terms.

     Other terms used in this Agreement are defined where they are used and have
     the meanings there indicated. Those terms, acronyms and phrases utilized in
     the IT services industry or other pertinent business context shall be
     interpreted in accordance with their generally understood meaning in such
     industry or business context.

3.   SERVICES

3.1  Provision of Services.

     (a)  In General. Commencing on the Effective Date, subject to Section 3.1
          (h) below, IBM shall provide each of the following services, functions
          and responsibilities, as they may be supplemented, enhanced, modified
          or replaced all in accordance with the Agreement ("Services"),
          including any evolution to the Services provided under this Agreement:

          (i)  the services, functions and responsibilities described in this
               Agreement and its Schedules, including Schedule A; and

          (ii) the services, functions and responsibilities to the extent
               performed during the twelve (12) months preceding the Effective
               Date by Empire personnel (which includes Empire employees and
               contractors employed by Empire) whose functions were displaced as
               a result of this Agreement, even if the service, function, or
               responsibility so performed is not specifically described in this
               Agreement; provided, however, that with respect to Data Center
               and Help Desk ad hoc projects which (before the Effective Date)
               were performed utilizing Empire personnel, any such ad hoc
               project shall be considered "Services" only to the extent such ad
               hoc project is of the type that can be performed in such a way as
               not to unreasonably interfere with the provision of Services.

     (b)  Implied Services. If any services, functions or responsibilities not
          specifically described in this Agreement are required for the proper
          performance and provision of the Services, they shall be deemed to be
          implied by and included within the scope of the Services to the same
          extent and in the same manner as if specifically described in this
          Agreement.

     (c)  Resources Generally. Except as otherwise expressly provided in this
          Agreement, IBM shall be responsible for providing all of the resources
          necessary to provide the Services, including facilities, personnel,
          software and equipment.

     (d)  Services Variable In Scope and Volume. The Services may vary in scope
          and volume, as set forth in this Agreement. Such variations are
          provided for in the pricing mechanisms set forth or referenced in
          Article 13 and in Schedule C, and IBM shall not be entitled to receive
          an adjustment to the charges except as set forth therein.

     (e)  Services Performed by Empire or Third Party.

          (i)  Empire has the right to perform itself, or retain third parties
               to perform, any of the Services, subject to the limitations set
               forth in Section 7(c) of Schedule C.

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               To the extent Empire performs any of the Services itself, or
               retains third parties to do so, IBM shall cooperate with Empire
               or such third parties in connection with this performance at no
               additional charge to Empire, which cooperation shall include: (A)
               providing access to the facilities being used by IBM to provide
               the Services (as necessary for Empire or a third party to perform
               its work); (B) providing access to the Equipment and Software (to
               the extent permitted under any underlying agreements with third
               parties); and (C) providing such information regarding the
               operating environment, system constraints and other operating
               parameters as a person with reasonable commercial skills and
               expertise would find reasonably necessary for Empire or a third
               party to perform its work. Such cooperation (I) will be provided
               using existing resources; (II) will not interfere with the
               provision of the Services; and (III) except as otherwise set
               forth in this Agreement, will not require IBM to house any such
               third party personnel or resources, excluding network
               connectivity, at IBM facilities. To the extent that third parties
               provide services and/or products to Empire, IBM shall perform
               integration activities (at the personnel rates set forth in
               Schedule C, unless the Parties agree otherwise) in order to
               ensure the compatibility of systems, products, and/or services
               and the success of the total solution. In the event Empire
               reduces the Services pursuant to this Section 3.1(e), those
               affected portions of the Agreement shall be adjusted as
               appropriate, and charges shall be adjusted in accordance with
               Schedule C.

          (ii) Third parties retained by Empire shall comply with IBM's
               reasonable security and confidentiality requirements and with
               IBM's reasonable work standards, methodologies and procedures, as
               these have been provided by IBM. IBM shall promptly notify Empire
               once it determines that an act or omission of such a third party
               may cause a problem or delay in providing the Services and shall
               work with Empire to prevent or circumvent such problem or delay,
               while not interfering with IBM's ability to provide the Services.

     (f)  Other Entities. As of the Effective Date, IBM shall provide the
          Services to Empire, to Empire's Affiliates, and on Empire's behalf to
          those entities to whom services similar to the Services were being
          provided immediately prior to the Effective Date (collectively
          "Service Recipients"). At Empire's option, IBM shall perform Services
          for the following, which, during such extended period of time as
          follows, shall be deemed to be "Service Recipients": (i) an entity
          which is an Affiliate of Empire shall continue to receive Services for
          up to twenty-four (24) months (and longer if agreed by the Parties)
          after the date it ceases to be Controlled by Empire, and (ii) the
          purchaser of all or substantially all the assets of any line of
          business of Empire or its Affiliates shall continue to receive
          Services for up to twenty-four (24) months (and longer if agreed by
          the Parties) after the date of purchase, but only with respect to the
          business acquired. During the Term, IBM shall also provide the
          Services on Empire's behalf to such other entities (e.g., members,
          doctors, hospitals, unions) as Empire designates from time to time.
          Notwithstanding the previous sentence, Empire may utilize the Services
          in support of or as part of Empire's business operations and
          offerings, provided that such business operations and offerings do not
          constitute an IT Service Bureau, as defined in the Licensing and Joint
          Development Agreement, (except that the foregoing proviso shall not
          apply with respect to Service Recipients), and further provided that
          if Empire requires use of the Services in connection with entities
          that are not Service Recipients

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          and not Empire Affiliates and as a result (A) IBM would incur
          additional costs to a third party (e.g., additional third party
          license fees), or (B) IBM's unit cost of delivery of the Services is
          materially impacted, then there will be an equitable adjustment to the
          charges to accommodate such costs. For purposes of this Agreement,
          Services provided to the entities referenced in this Section 3.1(f)
          shall be deemed to be Services provided to Empire.

     (g)  Affiliates of Empire. References to "Empire" as used in this Agreement
          with respect to receipt of the Services shall be deemed to include
          Affiliates of Empire.

     (h)  Service Commencement Dates. IBM's responsibilities with respect to the
          Core Applications Services, the Data Center Services, the
          Telecommunications Connectivity Services, the Help Desk Services, and
          the Modernization Services shall commence on the following dates (each
          a "Service Commencement Date"):

          (i)  with respect to the Data Center Services and the
               Telecommunications Connectivity Services, on June 1, 2002 with
               respect to Equipment, Software and Assets, and July 15, 2002 with
               respect to IBM Personnel; provided that the Data Center Migration
               is substantially complete;

          (ii) with respect to the Help Desk Services, on October 7, 2002;
               provided that the Help Desk Migration is substantially complete;

          (iii) with respect to the Core Applications Services (including third
               party service contracts for consultants), on July 15, 2002;
               provided that the Core Applications Migration is substantially
               complete; and

          (iv) with respect to the Modernization Services, on such date as
               requested by Empire.

          The Parties acknowledge that any of the foregoing dates may be changed
          by mutual agreement of the Parties.

3.2  Overview of Services.

     As more fully described in the Services Schedules, and with respect to
     Migration Services as described in Section 8.7, IBM shall perform the
     services, functions and responsibilities for the following Services: (a)
     Core Applications Services, Data Center Services, Help Desk Services, and
     Telecommunications Connectivity Services (the foregoing Services,
     collectively, the "Managed Operations Services" and each individually,
     along with items (b) and (c) in this Section, a "Tower"), and (b) the
     Modernization Services.

4.   TERM

4.1  Term.

     The term of this Agreement shall begin on the Effective Date and shall
     expire on the date that is the ten (10)-year anniversary of the Effective
     Date unless terminated earlier or extended in accordance with this
     Agreement (the "Term").

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4.2  Extension.

     (a)  By giving written notice to IBM no less than 120 days prior to the
          then-existing expiration date of this Agreement, Empire shall have the
          one-time right to extend the Term of this Agreement (in whole or
          in-part, provided that any in-part extension shall be not less than a
          complete Tower) for up to thirty-six (36) months on the terms and
          conditions then in effect.

     (b)  In the event that Empire elects not to extend certain cross-functional
          Services (e.g., Help Desk) during an extension in-part, and in the
          event that IBM determines in good faith that such election will
          materially and adversely impair IBM's ability to continue to provide
          extended Services, then IBM shall provide Empire a proposal that
          identifies any expected impact due to such Empire election.

5.   IBM PERSONNEL

5.1  Key IBM Positions.

     (a)  "Key IBM Positions" shall be, as of the Effective Date, the positions
          set forth as such in Schedule D-3. IBM shall cause each of the IBM
          Personnel filling the Key IBM Positions to devote substantially full
          time and effort for at least the period specified in Schedule D-3 to
          the provision of the Services. IBM Personnel approved as of the
          Effective Date to fill the Key IBM Positions are listed in Schedule
          D-3.

          (i)  Empire may from time to time change the positions designated as
               Key IBM Positions under this Agreement, provided that without
               IBM's consent, the number of Key IBM Positions shall not exceed
               the number initially specified in Schedule D-3 as of the
               Effective Date. In response to such Empire change as set forth in
               the previous sentence, IBM shall use Commercially Reasonable
               Efforts to implement such change as soon as possible, and in no
               event greater than ninety (90) days, provided that in such
               instances in which special skills are necessary to affect such
               change, IBM will diligently pursue satisfaction of such Empire
               change.

          (ii) IBM shall, in accordance with Section 5.1(b), designate an
               individual to serve as "IBM Project Executive." The IBM Project
               Executive shall be one of the Key IBM Positions. The IBM Project
               Executive shall (i) serve as the single point of accountability
               for IBM for the Services; and (ii) have day-to-day authority for
               undertaking to ensure customer satisfaction. A significant factor
               in the computation of the IBM Project Executive's incentive
               compensation shall be based on Empire's satisfaction with the
               Services. During the Term, the IBM Project Executive shall be
               located at Empire's offices in New York, New York, or such other
               location reasonably designated by Empire from time to time.

     (b)  Before assigning an individual to a Key IBM Position, whether as an
          initial assignment or a subsequent assignment, IBM shall (i) notify
          Empire of the proposed assignment, (ii) introduce the individual to
          appropriate Empire representatives, (iii) provide such representatives
          upon request with the opportunity to interview the individual, and
          (iv) provide Empire with a resume and other information about the
          individual reasonably

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          requested by Empire. If Empire objects in good faith to the proposed
          assignment, the Parties shall attempt to resolve Empire's concerns on
          a mutually agreeable basis. If the Parties have not been able to
          resolve Empire's concerns within five (5) Business Days, IBM shall not
          assign the individual to that position and shall propose to Empire the
          assignment of another individual of suitable ability and
          qualifications. Except with Empire's consent (which may be withheld in
          Empire's sole discretion), individuals filling Key IBM Positions may
          not be transferred or re-assigned to other positions with IBM or its
          Affiliates until a suitable replacement has been approved by Empire,
          and no such transfer shall occur at a time or in a manner that would
          have a material adverse impact on delivery of the Services. IBM shall
          establish and maintain an up-to-date succession plan for the
          replacement of individuals serving in Key IBM Positions that shall be
          reviewed with Empire on a regular basis.

     (c)  For so long as an individual is assigned to a Key IBM Position, and
          for twelve (12) months thereafter, IBM shall not assign such
          individual to perform services for the benefit of any Empire
          Competitor.

5.2  Transitioned Personnel.

     (a)  IBM shall interview all of the Empire employees listed in Schedule D-
          I ("Affected Employees"), shall extend offers of employment to the Key
          Transitioned Employees, and shall extend offers of employment to as
          many other Affected Employees as possible, all by the date that is
          forty-five (45) days after the Effective Date. Such employment as set
          forth in the previous sentence shall be effective on or before such
          times as specified in Schedule D, including its Attachments. IBM shall
          also, on a good faith basis, determine if any Affected Employees have
          the skills and services which IBM can utilize for other IBM customers,
          and IBM may extend job offers to such employees. IBM shall keep on
          file, for a period of at least six (6) months after the Effective
          Date, the employment applications of all Affected Employees to which
          IBM does not extend offers of employment. "Transitioned Employees"
          shall mean Affected Employees who accept IBM's offer and become
          employed by IBM effective as of a date as to which the Parties
          mutually agree. Terms for offers of employment to Affected Employees
          and for employment of Transitioned Employees shall include those set
          forth in Schedule D.

     (b)  IBM acknowledges that certain of the Transitioned Employees, as such
          employees are identified in Schedule D-2, are employees who Empire
          believes are critical to IBM in providing the Services ("Key
          Transitioned Employees"). In the event that an Empire employee listed
          as a Key Transitioned Employee does not accept his or her employment
          offer from IBM, or is not hired by IBM (i) because such employee does
          not pass IBM's background check conducted on such employee, (ii)
          because such employee does not pass IBM's drug test conducted on such
          employee, (iii) due to I-9 immigration requirements, or (iv) for other
          just cause, then Empire shall have the right to designate another
          Affected Employee as a substitute Key Transitioned Employee. During
          the first twelve (12) months following the Transition Date (as defined
          in Schedule D), IBM may not, without Empire's prior written approval:
          (A) terminate, except for cause (as defined in Schedule D), the
          employment of a Key Transitioned Employee; or (B) transfer or reassign
          a Key Transitioned Employee from performing the Services. In the event
          of any termination of a Key Transitioned Employee for cause as defined
          in Schedule D, Empire

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          shall have the right to designate another Affected Employee as a
          substitute Key Transitioned Employee.

5.3  Qualifications, Retention and Replacement of IBM Personnel.

     (a)  Empire and IBM agree that it is in their best interests to keep the
          turnover rate of IBM Personnel to a reasonably low level. Accordingly,
          if Empire believes that IBM's turnover rate may be excessive and so
          notifies IBM, IBM shall provide data concerning its turnover rate and
          meet with Empire to discuss the reasons for, and impact of, the
          turnover rate. If requested by Empire, IBM shall submit to Empire its
          proposals for reducing the turnover rate, and the Parties shall
          mutually agree on a program to bring the turnover rate down to an
          acceptable level. In any event, to the extent that the turnover rate
          adversely affects (or as reasonably demonstrated by Empire could
          adversely affect) the provision of the Services, IBM shall use
          Commercially Reasonable Efforts to keep the turnover rate to a
          reasonably low level, and notwithstanding transfer or turnover of IBM
          Personnel, IBM remains obligated to perform the Services in accordance
          with this Agreement.

     (b)  While at Empire's premises (or the premises of others receiving the
          Services hereunder), IBM Personnel shall (i) comply with Empire's
          requests, rules, and regulations regarding personal and professional
          conduct (including the wearing of an identification badge and adhering
          to regulations and general safety, dress, behavior, and security
          practices or procedures) generally applicable to such premises and
          communicated to the IBM Project Executive or an IBM-designated
          location senior IBM manager, and (ii) otherwise conduct themselves in
          a businesslike and professional manner. If requested by Empire, IBM
          shall have all IBM Personnel engaged in providing Services to Empire
          execute acknowledgement of Empire's conduct and other policies and IBM
          shall maintain records of compliance therewith which shall be made
          available to Empire upon request.

     (c)  In the event that Empire determines in good faith that the continued
          assignment to Empire's account of one of the IBM Personnel is not in
          the best interests of Empire, then Empire shall give IBM written
          notice to that effect. After receipt of such notice, IBM shall have a
          reasonable period of time in which to investigate the matters stated
          in such notice, discuss its findings with Empire and resolve the
          problems with such person. If, following such period (not to exceed
          ten (10) Business Days), Empire requests replacement of such person,
          IBM shall replace that person with another person of suitable ability
          and qualifications. However, where Empire notifies IBM that Empire has
          determined that the nature of the concern is of such a nature that
          such IBM Personnel should be removed immediately (albeit temporarily)
          from Empire's account, IBM shall immediately remove such individual(s)
          from Empire's account, provided that any such Empire request for
          immediate removal of IBM Personnel (i) may not be arbitrary, and/or
          (ii) may not be unlawful (e.g., removal because of employee's age). In
          any event, any request by Empire to remove an individual from Empire's
          account shall not be deemed to constitute a termination of such
          individual's employment by IBM and in no event shall Empire be deemed
          an employer of any such person.

     (d)  In the event Empire requests IBM to provide New Services, as provided
          in Section 13.6, IBM shall use Commercially Reasonable Efforts to
          provide such New Services utilizing IBM Personnel who are familiar
          with the Empire account and Empire's business.

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     (e)  The Parties acknowledge that if IBM fails to meet Service Levels
          during the Term, and such failures are caused by the fact that IBM's
          Personnel are inadequately trained, then Empire shall have the right
          to require IBM to implement solutions, as reasonably suggested by
          Empire, at IBM's cost, in order to address such personnel issues
          leading to the failures.

5.4  Compliance With Empire Policies.

     IBM shall ensure that its employees comply during the Term, and require
     that its subcontractors and agents comply, with: (a) the Empire Code of
     Business Conduct, as attached in Schedule N-I and as amended from time to
     time by Empire, except where clearly not applicable (e.g., the general
     statement that employees should report concerns to any member of the Empire
     in-house Compliance Committee shall not obligate IBM employees to report to
     Empire attorneys) or where IBM has substantially equivalent policies (e.g.,
     IBM Personnel will follow IBM policies with respect to discrimination and
     harassment complaints), (b) the Empire Corporate Compliance Program, as
     attached in Schedule N-2 and as amended from time to time by Empire, and
     (c) all rules of behavior, work schedules, security procedures and other
     standards, policies and procedures as established by or maintained by
     Empire from time to time and communicated to the IBM Project Executive. To
     the extent the foregoing policies and procedures change during the Term,
     Empire shall inform the IBM Project Executive in writing. If such changes
     have a significant impact on the cost of delivery, IBM shall be entitled to
     an equitable adjustment.

6.   EQUIPMENT AND THIRD PARTY SERVICE CONTRACTS

     The Parties' respective rights and responsibilities with respect to (i)
     existing and future Equipment and Third Party Service Contracts are
     described in this Article 6, and (ii) existing and future Software are
     described in Article 7. For purposes of Articles 6 and 7, such existing and
     future Equipment, Third Party Service Contracts and Software are generally
     referenced as "Assets". Articles 6 and 7 herein, the Equipment and Software
     Responsibility Allocation Matrices attached as Schedule J, and the listing
     of Third Party Service Contracts, Existing Equipment and Existing Software
     set forth in Schedules E, F and G, respectively, shall be construed
     consistently, but in the event of any conflict, the text of Articles 6 and
     7 shall supersede any inconsistent information contained in Schedules E, F,
     G and J. Except to the extent specifically provided in this Agreement, IBM
     shall be responsible for providing all resources and Assets (including
     Equipment and Software) necessary to provide the Services and will only
     recover such costs through the charging mechanisms set forth in this
     Agreement. Grant by Empire to IBM of rights of use pursuant to this Article
     6 shall be deemed to include, subject to the other provisions of this
     Agreement, grant of such rights to IBM's subcontractors (subject to Section
     10.5). Equipment and Third Party Service Contracts made available by Empire
     to IBM pursuant to this Article 6 shall be made available in good working
     order, and otherwise "as is, where is", with no warranties whatsoever.

6.1  Generally.

     For purposes of Articles 6 and 7, a Party having operational,
     administrative or financial responsibility for any particular Asset shall
     mean the following:

     (a)  A Party who has operational responsibility for an Asset means that
          such Party shall be responsible for operational support of the Asset
          including (i) the unpacking,

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          configuration; staging, setup and installation of such Asset, and (ii)
          the maintenance of such Asset.

     (b)  A Party who has administrative responsibility for an Asset means that
          such Party shall be responsible for managing such Asset, including (i)
          the tracking of renewal dates and license compliance provisions, (ii)
          providing notice to the Party with legal responsibility when actions
          need to be taken with respect to such Asset (e.g., notification of
          renewal of the license for such Asset), and (iii) receiving invoices
          from third party vendors, promptly reviewing such invoices, and
          providing to the Party with financial responsibility the original
          invoice together with a statement identifying which charges are proper
          and valid and should be paid.

     (c)  A Party who has financial responsibility for an Asset means that such
          Party shall be responsible for all current (applicable immediately
          after the effective date of such financial responsibility) and future
          financial costs and expenses related to acquisition, lease, license,
          or other ownership costs for such current and future Assets, including
          upgrades, enhancements, new releases, replacements, expanded license
          rights, growth and technology refreshments (including third party
          software maintenance agreements). Charges for items for which IBM has
          financial responsibility are as specified in Schedule C.

6.2  Existing Equipment.

     (a)  Existing Owned Equipment.

          As of the Effective Date: (i) Empire shall sell, and IBM shall
          purchase, the Existing Owned Equipment as identified in Schedule F,
          and (ii) IBM shall be operationally, administratively, and financially
          responsible for all Existing Owned Equipment. Empire shall execute a
          Bill of Sale in the form set forth as Schedule R to evidence such
          conveyance. The purchase price shall be as set forth in such Bill of
          Sale, and shall be paid by IBM within ten (10) days of the Effective
          Date.

     (b)  Existing Leased Equipment.

          Subject to Section 6.6, as of the Effective Date: (i) Empire assigns
          to IBM, and IBM accepts such assignment for, the leases for Existing
          Leased Equipment, including as identified in Schedule F, and (ii) IBM
          shall be operationally, administratively, and financially responsible
          for all Existing Leased Equipment. IBM shall pay directly (or
          reimburse Empire in the case of prepayment of) the charges under such
          leases that are attributable to periods on and after the Effective
          Date. IBM shall comply with the duties imposed by such leases.

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6.3  Equipment Acquisitions During the Term.

     (a)  Existing Equipment. IBM shall acquire and shall be operationally,
          administratively, and financially responsible for modifications,
          repairs, upgrades, enhancements, additions and replacements of
          Existing Equipment, including IBM's responsibility to refresh Existing
          Equipment as provided in the Data Center Services Schedule, as
          necessary or appropriate to provide the Services. Such Equipment shall
          be acquired in the name of IBM.

     (b)  Additional Levels of Equipment.

          IBM shall acquire and shall be operationally, administratively, and
          financially responsible for additional levels of Equipment --
          including modifications, upgrades, enhancements, additions and
          replacements of such additional Equipment -- as necessary or
          appropriate to provide the Services. Except as otherwise provided in
          Section 3.3(f) of Schedule C, such additional Equipment shall be
          acquired in the name of IBM and shall be purchased or leased as
          designated by Empire. Any purchase or lease contract for such new
          Equipment shall grant Empire or its designee the right to use such
          Equipment.

6.4  Removal and Disposal of Equipment.

     (a)  Removal and Disposal of Equipment Owned or Leased by Empire. As
          directed by Empire and as approved by Empire with respect to removal
          and disposal charges, IBM shall dispose of Equipment owned (legally or
          beneficially) or leased (in accordance with the applicable
          requirements of the lease) by Empire and no longer needed for the
          provision of the Services. Subject to the preceding sentence, Empire
          shall be responsible for IBM's reasonable costs associated with the
          removal and disposal of such Equipment, and IBM shall pay to Empire
          the positive difference, if any, between the value received by IBM for
          such Equipment and the costs reasonably incurred by IBM in disposing
          of such Equipment.

     (b)  Removal and Disposal of Equipment Owned or Leased by IBM. IBM shall be
          responsible for the removal and disposal of Equipment owned or leased
          by IBM and no longer required for the provision of the Services. IBM
          shall be responsible for all costs, charges or fees associated with
          the disposal of such Equipment.

6.5  Third Party Service Contracts.

     (a)  Subject to Section 6.6, as of July 15, 2002, Empire assigns to IBM,
          and IBM accepts such assignment for, the Third Party Service
          Contracts, including as identified in Schedule E. IBM shall be
          financially responsible for (or reimburse Empire in the case of
          prepayment of) the charges under the Third Party Service Contracts
          assigned to IBM where such charges are attributable to periods on and
          after the Effective Date. IBM shall have administrative responsibility
          for such Third Party Service Contracts and shall comply with the
          duties imposed on Empire by such Third Party Service Contracts.

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     (b)  The Parties acknowledge that certain Software and Equipment
          maintenance and support agreements used by Empire prior to the
          Effective Date (including maintenance and support provisions
          incorporated into the related software license) are listed on
          Schedules F and G. These agreements shall be treated in the same
          manner as the Software or Equipment which is the subject of such
          agreement is treated under this Article 6 (for Equipment) and Article
          7 (for Software), including whether such agreement is retained by
          Empire or assigned to IBM, and the allocation of financial,
          operational, and administrative responsibility as between the Parties.
          For example, if certain Software on Schedule F is being retained by
          Empire (i.e., not assigned to IBM), but IBM is assuming financial,
          operational and administrative responsibility with respect to such
          Software, the retention and allocation of responsibility with respect
          to the underlying maintenance agreement shall be handled the same as
          the Software. The Software and Equipment maintenance and support
          agreements and provisions described in this Section 6.5(b) shall
          constitute Third Party Service Contracts for purposes of this
          Agreement.

     (c)  Prior to entering into any new third party service contract to provide
          the Services (including an extension or modification of a Third Party
          Service Contract that is assigned or made available by Empire to IBM
          pursuant to Section 6.5(a)), IBM shall comply with the following:

          (i)  IBM shall use Commercially Reasonable Efforts to obtain, at no
               additional cost to Empire, any transfer or assignment rights
               necessary for Empire to use such third party service contract,
               for Empire or Empire's designee to continue providing the
               Services after the applicable termination or expiration effective
               date.

          (ii) IBM shall determine whether such third party vendor will grant
               such transfer or assignment rights in favor of Empire. With
               respect to third party service contracts relating to
               non-Generally Available Software, IBM shall also determine
               whether such third party vendor will (A) grant such transfer or
               assignment rights in favor of Empire but only if a fee is paid to
               such third party vendor, or (B) not grant such transfer or
               assignment rights in favor of Empire. In the event of item (A) or
               (B) in the previous sentence, IBM shall notify Empire in writing
               of its inability to obtain such transfer or assignment rights for
               Empire and of available alternative terms, and of the cost and
               viability of any other third party vendors that can perform the
               requisite services and with respect to which IBM has the ability
               to obtain such rights at no additional cost to Empire or for a
               lower cost than the proposed solution. Such notice shall contain
               the proposed third party vendor's then current terms and
               conditions (as provided by such vendor to IBM), if any, for
               making such new third party service contract available to Empire
               after the applicable termination or expiration effective date.
               With Empire's prior approval only (which Empire may withhold in
               its sole discretion), IBM may enter into such new third party
               service contract, for use in providing the Services.

          (iii) Upon termination or expiration of the Agreement, if any fees are
               necessary to transfer or assign to Empire the right to use any
               third party service contract relating to non-Generally Available
               Software used by IBM to provide the Services, then (A) Empire
               shall be responsible for such fees, if IBM received

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               Empire's advance written approval to be responsible for such fees
               before IBM entered into such then-new third party service
               contract, and (B) IBM shall be responsible for such fees, if IBM
               did not receive Empire's advance written approval to be
               responsible for such fees before IBM entered into such then-new
               third party service contract.

6.6  Special Terms.

     (a)  Required Consents. IBM, with the cooperation of Empire, shall be
          administratively and financially responsible, subject to Section
          6.6(b)(ii), for obtaining the Required Consents with respect to
          Software, Equipment, Equipment leases and Third Party Service
          Contracts, as necessary to perform the Services. Subject to Section
          6.6(b)(ii), IBM shall pay such fees (such as transfer or upgrade fees,
          additional licenses, sublicenses, and maintenance fees) as may be
          required to obtain a Required Consent. If a Required Consent is not
          obtained, then, unless and until such Required Consent is obtained,
          IBM shall determine and adopt, subject to Empire's prior approval,
          such alternative approaches as are necessary and sufficient to provide
          the Services without such Required Consents. Without limiting IBM's
          obligations under the foregoing, IBM hereby represents to Empire that
          it shall obtain the Required Consents for the Computer Associates
          Software and the BMC Software, which will permit IBM to utilize
          Empire's Computer Associates and BMC Software agreements. IBM shall be
          financially responsible for (i) charges under Empire's Computer
          Associates or BMC Software agreements or (ii) any other applicable
          costs associated with IBM's use of such software.

     (b)  Unidentified Resources.

          (i)  Equipment, Software and Third Party Service Contracts that are
               the subject of Articles 6 and 7 are listed in Schedules E, F and
               G. While the Parties intend that such schedules will be
               comprehensive, neither Party warrants the completeness or
               accuracy of such schedules.

          (ii) During the Term, if either of the Parties discovers that any
               Equipment, Third Party Software or Third Party Service Contract
               is not identified in Schedules E, F and G, respectively
               ("Unidentified Resources"), and the equipment, software and
               services relating to such Unidentified Resources are within the
               scope of Services provided for in this Agreement, then such Party
               shall notify the other. Upon the disclosure of Unidentified
               Resources: (A) IBM shall be operationally and administratively
               responsible for a (formerly) Unidentified Resource on the same
               basis for which it is responsible for the most comparable
               analogous resource already listed in an applicable Schedule, (B)
               IBM shall be financially responsible for any identified Existing
               Leased Equipment that is IBM Logoed Equipment and any identified
               Systems Software, and IBM shall make appropriate payments to
               Empire to reflect such Equipment or Systems Software that is
               identified; (C) Empire shall be financially responsible for any
               identified Existing Owned Equipment; (D) IBM shall be
               administratively responsible, and Empire shall be financially
               responsible, for obtaining any necessary Required Consents for
               Unidentified Resources; and (E) such Unidentified Resources shall
               be added to the appropriate Schedule by amendment of this
               Agreement in accordance with Section 23.2.

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          (iii) With respect to any Unidentified Resources that are Straddle
               Agreements, the Parties shall work together in good faith to
               determine and implement the most appropriate, including the most
               cost effective, method of leveraging such Straddle Agreement for
               the benefit of both Parties, consistent with the foregoing
               provisions of this Section 6.6(b).

7.   SOFTWARE AND PROPRIETARY RIGHTS

     This Article 7 addresses the Parties' respective rights in Software and
     related materials. Grant by Empire to IBM of a license to Use or of rights
     of Use pursuant to this Article 7 shall be deemed to include, subject to
     the other provisions of this Agreement, grant of such license or rights to
     IBM's subcontractors (subject to Section 10.5). Subject to Section 16.4(b),
     Software made available by Empire to IBM is made available on an "as is,
     where is" basis, with no warranties whatsoever.

7.1  Empire Software.

     (a)  Empire retains all right, title and interest in and to Empire
          Software. Empire grants to IBM a worldwide, fully paid-up,
          nonexclusive license during the Term to Use Empire Software solely to
          the extent necessary for performing the Services. Empire Software will
          be made available to IBM in such form and on such media as exists on
          the Effective Date or as is later obtained by Empire, together with
          available documentation and any other related materials. IBM shall not
          be permitted to Use Empire Software except to provide the Services
          without the prior written consent of Empire, which may be withheld at
          Empire's discretion. IBM shall install, operate and support, in
          accordance with Schedules A-1 and A-2, additional Empire Software that
          Empire may designate from time to time during the Term. Except as
          otherwise requested or approved by Empire, IBM shall cease all Use of
          Empire Software upon expiration or termination of this Agreement.

     (b)  Empire shall be the sole and exclusive owner of all patents,
          copyrights, trade secrets and other intellectual property and related
          intellectual property rights owned by Empire as of the Effective Date
          (collectively, "Pre-Existing Empire Intellectual Property"). Except
          for the license rights contained in this Agreement, IBM is not
          acquiring any interest in or to such intellectual property or rights.
          Pre-Existing Empire Intellectual Property shall include all patents,
          copyrights, trade secrets and other intellectual property rights in
          and to Empire Software and Confidential Information of Empire.

7.2  IBM Software.

     (a)  IBM retains all right, title and interest in and to IBM Software, and
          as of the Effective Date, IBM will have operational, administrative,
          and financial responsibility for IBM Software, including, as necessary
          or appropriate to provide the Services, modifications, upgrades,
          enhancements, additions and replacements of IBM Software and
          introduction of new IBM Software (and modifications, upgrades,
          enhancements, additions and replacements thereof). IBM shall not
          introduce any IBM Software in providing the Services without Empire's
          prior written approval, which approval Empire may withhold in its sole
          discretion. IBM shall be responsible for installing, operating and
          maintaining IBM Software at no additional expense to Empire. As and to
          the extent necessary for

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          Empire or a third party to perform work as permitted under this
          Agreement, IBM grants to Empire or such third party a non-exclusive
          license to Use such Software for such work during the Term for the
          sole benefit of Empire, except that for purposes of this sentence,
          "Use" shall not include the right to modify, enhance, make derivative
          works or distribute.

     (b)  IBM shall be the sole and exclusive owner of all patents, copyrights,
          trade secrets and other intellectual property and related intellectual
          property rights owned by IBM as of the Effective Date (collectively,
          "Pre-Existing IBM Intellectual Property"). Except for the license
          rights contained in this Agreement, Empire is not acquiring any
          interest in or to such intellectual property or rights.

     (c)  With respect to Existing Systems Software which is IBM Systems
          Software, as of the Effective Date, Empire hereby assigns and IBM
          hereby assumes the licenses for such Software, including as identified
          in Schedules G-1 S, G-2 S and G-3 S. As of the Effective Date, IBM
          shall be (i) operationally and administratively responsible for such
          Software, and (ii) financially responsible for such Software,
          including, as necessary or appropriate to provide the Services,
          modifications, upgrades, enhancements, additions and replacements of
          existing IBM Systems Software and introduction of new IBM Systems
          Software (and modifications, upgrades, enhancements, additions and
          replacements thereof). IBM shall pay directly (or reimburse Empire in
          the case of prepayment of) the charges under such licenses that are
          attributable to periods on and after the Effective Date.

     (d)  This Section 7.2(d)(but excluding Sections 7.2(d)(i)-(ii)) is
          intended to supplement, and shall not alter the provisions of,
          Schedule C. IBM shall be responsible for identifying the need for new
          IBM Systems Software, evaluating potential options for satisfying the
          need for new IBM Systems Software, recommending alternative approaches
          at different price levels, if any, for satisfying such need, and
          implementing the approach selected by Empire. In identifying such
          need, IBM shall provide such information as required for Empire to
          make an informed decision as to whether to install new IBM Systems
          Software, including information regarding the management, utilization
          and efficiency of then-existing Systems Software. Upon Empire's
          request, IBM shall also recommend actions to decrease Empire's charges
          with respect to IBM Systems Software under Section 3.3 of Schedule C.
          If (A) as a result of IBM's capacity planning obligations or other
          performance considerations (as provided in the Services Schedules and
          Schedule C) IBM recommends that existing IBM Systems Software be
          upgraded or new IBM Systems Software be supplied, or (B) Empire
          requests that existing IBM Systems Software be upgraded or new IBM
          Systems Software be supplied, IBM shall promptly provide to Empire a
          quote as to the cost for IBM to supply such Software, in accordance
          with Sections 3.3(b)(vi-vii) and 3.3(c) of Schedule C. The price for
          acquiring or licensing such new IBM Systems Software shall be in
          conformance with Schedule C. Upon receipt of the price quote from IBM,
          Empire may decide, in its sole discretion, whether: (1) to approve
          IBM's supplying such Software; (2) to take no action; or (3) to
          purchase or license the Software itself.

          (i)  IBM shall be financially, operationally, and administratively
               responsible for new IBM Systems Software -- including
               modifications, upgrades, enhancements,

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               additions and replacements of IBM Systems Software -- as
               necessary or appropriate to provide the Services.

          (ii) Unless otherwise agreed in writing by the Parties, all licenses
               for new IBM Systems Software and all licenses for modifications,
               upgrades and enhancements (which shall not be introduced without
               Empire's prior written approval, which approval Empire may
               withhold in its sole discretion) of Existing Systems Software
               which is IBM Systems Software shall be in IBM's name. With
               respect to any IBM Systems Software newly licensed in the name of
               Empire: (A) Empire grants to IBM, solely to the extent necessary
               for performing the Services, the rights of Use of such Software
               that Empire has with respect to such Software, and (B) except as
               otherwise requested or approved by Empire, IBM shall cease all
               Use of such Software upon expiration or termination of this
               Agreement.

     (e)  Effective upon termination or expiration of this Agreement:

          (i)  with respect to Generally Available IBM Software which IBM uses
               to provide the Services and which is available to the public as
               "one-time charge" software, IBM grants to Empire (and designees
               thereof for the sole purpose of providing services to Empire) a
               perpetual license to use such software under IBM's standard
               commercial terms for such software, for no additional charge,
               subject to Section 7.2(e)(i)(A). Maintenance and support of such
               software after termination or expiration shall be under IBM's
               standard commercial terms for such software; provided that (1)
               such terms and charges shall be competitive with those offered by
               IBM to similar entities in similar circumstances (e.g., similar
               volumes, usages), and (2) IBM's charges shall be commercially
               reasonable.

               (A)  With respect to such Generally Available IBM Software, in
                    the event of any Empire termination of this Agreement
                    pursuant to Sections 15.4(d), 21.1(a), 21.1(b), 21.2, 21.4,
                    21.6 or 21.7, at Empire's option, if Empire chooses to
                    acquire the licenses for any such Generally Available IBM
                    Software, Empire shall pay the unamortized portion of the
                    license fees for such Software over a standard straight-line
                    amortization period. With respect to such Generally
                    Available IBM Software, in the event of any IBM termination
                    of this Agreement pursuant to Sections 21.1(c) or 21.2, or
                    any Empire termination of this Agreement pursuant to Section
                    21.3, Empire shall pay, and in the case of a termination
                    pursuant to Section 21.3, such payment shall be Wind Down
                    Costs pursuant to Section 21.3, the unamortized portion of
                    the license fees for such Software over a standard
                    straight-line amortization period. For clarification, upon
                    any event of termination or expiration, IBM shall grant to
                    Empire licenses for Generally Available IBM Software that
                    Empire had assigned to IBM upon the Effective Date.

               (B)  With respect to any refresh or acquisition of such Generally
                    Available IBM Software during the Term that would result in
                    IBM amortizing such Software during any period of time after
                    expiration of the

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                    Agreement: (I) prior to undertaking such refresh or
                    acquisition, IBM shall provide notice to Empire of the fact
                    that the refresh or acquisition would result in Empire being
                    responsible for the unamortized portion of the license fees
                    at the expiration of the Agreement in accordance with this
                    Section 7.2(e)(i)(B), including the cost of such Software
                    and the proposed amortization period; (II) the Parties will
                    discuss such matter and seek to mutually agree as to how to
                    approach such refresh or acquisition, which could include
                    agreement to a shorter amortization period, at Empire or
                    IBM's cost; agreement that either IBM or Empire will be
                    responsible for amortization costs after expiration of the
                    Agreement; or agreement not to proceed with the refresh or
                    acquisition; (III) in the event that the Parties are unable
                    to reach agreement under item (II), then Empire shall have
                    the right to direct IBM not to complete the refresh or
                    acquisition; and (IV) in the event that the Parties agree
                    not to proceed with any scheduled refresh or Empire directs
                    that there be no refresh, IBM's charges shall be equitably
                    reduced to reflect the fact that the refresh was not
                    completed (since such refresh is as of the Effective Date
                    included within the charges set forth in Schedule C). As
                    payment for the unamortized portion of the license fees
                    (amortized over a standard amortization period and not
                    back-end loaded) with respect to which IBM has followed the
                    foregoing process and with respect to which Empire has
                    agreed under item (II) above to proceed with the refresh or
                    acquisition, then upon expiration of the Agreement, Empire
                    shall pay the unamortized portion of the Software, provided
                    that such amount shall be equitably reduced if the original
                    Term of the Agreement is extended, including pursuant to
                    Section 4.2, or Empire requests IBM to continue to provide
                    Services after the effective date of expiration pursuant to
                    Section 21.9. This Section 7.2(e)(i)(B) applies to
                    expiration of the Agreement and not termination of the
                    Agreement;

          (ii) with respect to Generally Available IBM Software used by IBM to
               provide the Services and which is available to the public as
               "periodic charge" software, IBM grants to Empire (and designees
               thereof for the sole purpose of providing services to Empire) a
               license to use such software under IBM's standard commercial
               terms for such software. The periodic license fees after
               expiration or termination of this Agreement, and the terms and
               charges for IBM maintenance and support of such software, shall
               be under IBM's standard commercial terms for such software;
               provided that (A) such terms and charges shall be competitive
               with those offered by IBM to similar entities in similar
               circumstances (e.g., similar volumes, usages), and (B) IBM's fees
               and charges shall be commercially reasonable;

          (iii) with respect to non-Generally Available IBM Software used by IBM
               to provide the Services:

               (A)  IBM grants to Empire (and Empire's designees) a perpetual,
                    worldwide, fully paid-up, nonexclusive license to Use such
                    software (including any available source code, programmer
                    interfaces, available documentation, manuals, and other
                    materials necessary for the Use thereof), for the sole

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                    purpose of maintaining the non-Generally Available IBM
                    Software for Empire's use, and not for distribution,
                    provided that IBM shall not be required to provide such
                    source code unless IBM fails to provide or withdraws support
                    and maintenance for such software, all as described in the
                    remainder of this Section. IBM shall provide maintenance and
                    support for such software upon terms and conditions to be
                    mutually agreed prior to expiration or termination of the
                    Agreement, provided that: (I) such terms and charges shall
                    be competitive with those offered by IBM to similar entities
                    in similar circumstances (e.g., similar volumes, usages); or
                    (II) if IBM is not maintaining and supporting such software
                    for any other IBM customer, IBM's charges for such
                    maintenance and support shall not exceed the lower of (1)
                    maintenance and support charges for the commercial
                    equivalent of such software; (2) rates based on the
                    personnel rates attached to Schedule C, as escalated by the
                    inflation index set forth in Schedule C; or (3) IBM's
                    then-standard commercial rates for maintenance and support
                    of custom software. In any event, IBM's charges shall be
                    commercially reasonable. If IBM fails to provide or
                    withdraws such maintenance and support of such software, IBM
                    shall promptly deliver to Empire any existing source code
                    for such software, including any existing copies of
                    machine-readable and human-readable source code and
                    technical documentation for such software, and the license
                    granted above shall be deemed to be irrevocable. Any source
                    code which IBM is obligated to provide Empire shall be made
                    available to Empire on an "as is" basis; or

               (B)  in lieu of providing the source code to Empire pursuant to
                    Section 7.2(e)(iii)(A) above, IBM may, at its option,
                    provide Empire with a license to substitute software that is
                    Generally Available Software, provided that such software
                    shall: (I) provide substantially the same functionality and
                    performance as the non-Generally Available IBM Software it
                    would replace; (II) be at no additional charge to Empire
                    (except for applicable ongoing license fees and maintenance
                    charges); and (III) be installed and integrated into the
                    Empire environment by IBM at no additional charge to Empire;
                    and

          (iv) with respect to IBM Service Delivery Tools, IBM shall assist
               Empire in identifying alternative Generally Available service
               delivery tools and assist Empire in procuring such licenses on
               commercially reasonable terms, the fees for which shall be at
               Empire's expense.

7.3  Third Party Software.

     (a)  Existing Third Party Applications Software.

          (i)  With respect to the Third Party Applications Software licensed by
               Empire, including as identified in Schedules G-1 A, G-2 A and G-3
               A and subject to IBM having obtained Required Consents for Third
               Party Software as provided in Section 6.6(a), Empire grants to
               IBM, solely to the extent necessary for performing the Services,
               the rights of Use of such Software that Empire has as of

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               the Effective Date or later obtains with respect to such
               Software. IBM (A) shall comply with the duties, including Use
               restrictions and those of nondisclosure, imposed on Empire by the
               licenses for such Software, and to the extent such duties are
               modified by the Required Consent for such Software, IBM will
               comply with the Required Consent as to the modified duties, and
               (B) shall not seek to modify or otherwise revoke such terms.

          (ii) Licenses for Existing Third Party Applications Software shall
               remain in the name of Empire, except as the Parties otherwise
               mutually agree. IBM shall be operationally and administratively
               responsible for such Software, and Empire shall be financially
               responsible for such Software. Except as otherwise requested or
               approved by Empire, IBM shall cease all Use of such Software upon
               expiration or termination of this Agreement.

     (b)  New Third Party Applications Software.

          (i)  IBM will not introduce new Third Party Applications Software in
               providing the Services without Empire's prior written approval,
               which approval Empire may withhold in its sole discretion. IBM
               will install and maintain (and otherwise treat in the same manner
               as existing Third Party Applications Software) additional Third
               Party Applications Software that Empire may designate from time
               to time during the Term. Unless otherwise agreed in writing by
               the Parties, all licenses for new Third Party Applications
               Software shall be in Empire's name, and Empire shall grant to
               IBM, solely to the extent necessary for performing the Services,
               the rights of Use of such Software that Empire obtains with
               respect to such Software. IBM (A) shall comply with the duties,
               including Use restrictions and those of nondisclosure, imposed on
               Empire by the licenses for such Software, and to the extent such
               duties are modified by the Required Consent for such Software,
               IBM will comply with the Required Consent as to the modified
               duties, and (B) shall not seek to modify or otherwise revoke such
               terms.

          (ii) IBM shall be operationally and administratively responsible for
               new Third Party Applications Software, and Empire shall be
               financially responsible for such Software. Except as otherwise
               requested or approved by Empire, IBM shall cease all Use of such
               Software upon expiration or termination of this Agreement.

     (c)  Existing Third Party Systems Software. Licenses for Existing Third
          Party Systems Software, including as identified in Schedules G-1 S,
          G-2 S and G-3 S, shall remain in the name of Empire, except as the
          Parties otherwise mutually agree. As of the Effective Date, subject to
          IBM having obtained Required Consents for such Software as provided in
          Section 6.6(a), Empire grants to IBM solely to the extent necessary
          for performing the Services, the rights of Use of such Software that
          Empire has as of the Effective Date or later obtains with respect to
          such Software. IBM (i) shall comply with the duties, including Use
          restrictions and those of nondisclosure, imposed on Empire by the
          licenses for such Software, and to the extent such duties are modified
          by the Required Consent for such Software, IBM will comply with the
          Required Consent as to the modified duties, and (ii) shall not seek to
          modify or otherwise revoke such terms. As of the Effective Date, IBM
          shall be (A) operationally and administratively responsible for all

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          Existing Third Party Systems Software, and (B) financially responsible
          for all Existing Third Party Systems Software, including, as necessary
          or appropriate to provide the Services, modifications, upgrades,
          enhancements, additions and replacements of Existing Third Party
          Systems Software and introduction of new Existing Third Party Systems
          Software (and modifications, upgrades, enhancements, additions and
          replacements thereof). Provided that Empire maintains legal
          responsibility for any Existing Third Party Systems Software upon
          expiration or termination of this Agreement, IBM shall cease all Use
          of such Software upon expiration or termination of this Agreement,
          except as otherwise requested or approved by Empire.

     (d)  New Third Party Systems Software.

          (i)  IBM shall not introduce any Third Party Systems Software in
               providing the Services without Empire's prior approval, which
               approval Empire may withhold in its sole discretion.

          (ii) The following Section 7.3(d)(ii) is intended to supplement, and
               shall not alter the provisions of, Schedule C. IBM shall be
               responsible for identifying the need for new Third Party Systems
               Software, evaluating potential options for satisfying the need
               for new Third Party Systems Software, recommending alternative
               approaches at different price levels, if any, for satisfying such
               need, and implementing the approach selected by Empire. In
               identifying such need, IBM shall provide such information as
               required for Empire to make an informed decision as to whether to
               install new Third Party Systems Software, including information
               regarding the management, utilization and efficiency of
               then-existing Systems Software. If requested by Empire, IBM shall
               also recommend actions to decrease Empire's charges under Section
               3.3 of Schedule C. If (A) as a result of IBM's capacity planning
               obligations or other performance considerations (as provided in
               the Services Schedules and Schedule C) IBM recommends that Third
               Party Systems Software be purchased or upgraded, or (B) Empire
               requests that Third Party Systems Software be purchased or
               upgraded, IBM shall promptly provide to Empire a quote as to the
               cost for IBM to procure such Software from third party vendors,
               in accordance with Section 3.3(b)(viii) of Schedule C. The price
               for acquiring or licensing such new Third Party Systems Software
               shall also reflect the benefit of applicable volume purchasing
               discounts and other similar discounted purchasing arrangements
               with third party vendors available to IBM (to the extent that IBM
               has the necessary rights) or Empire. Upon receipt of the price
               quote from IBM, Empire may decide, in its sole discretion,
               whether: (1) to approve IBM's procurement of such Software; (2)
               to take no action; or (3) to purchase or license the Software
               itself.

          (iii) IBM shall be financially, operationally, and administratively
               responsible for new Third Party Systems Software -- including
               modifications, upgrades, enhancements, additions and replacements
               of Third Party Systems Software -- as necessary or appropriate to
               provide the Services.

          (iv) Unless otherwise agreed in writing by the Parties, all licenses
               for new Third Party Systems Software and all licenses for
               modifications, upgrades and enhancements (which shall not be
               introduced without Empire's prior written

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               approval, which approval Empire may withhold in its sole
               discretion) of Existing Third Party Systems Software shall be in
               Empire's name. To the extent Empire obtains such Software itself,
               the license shall be in Empire's name. With respect to any Third
               Party Systems Software newly licensed in the name of Empire,
               Empire grants to IBM, solely to the extent necessary for
               performing the Services, the rights of Use of such Software that
               Empire has with respect to such Software. IBM (A) shall comply
               with the duties, including Use restrictions and those of
               nondisclosure, imposed on Empire by the licenses for such
               Software, and to the extent such duties are modified by the
               Required Consent for such Software, IBM will comply with the
               Required Consent as to the modified duties, and (B) shall not
               seek to modify or otherwise revoke such terms. Except as
               otherwise requested or approved by Empire, IBM shall cease all
               Use of such Software upon expiration or termination of this
               Agreement.

     (e)  With respect to Third Party Systems Software described in Sections
          7.3(c) and 7.3(d), effective upon termination or expiration of this
          Agreement:

          (i)  with respect to Generally Available Third Party Systems Software,
               IBM shall provide to Empire (and designees thereof for the sole
               purpose of providing services to Empire) licenses to each such
               Software on the same terms that IBM has with respect to such
               Software.

               (A)  With respect to Generally Available Third Party Systems
                    Software used by IBM to provide the Services, in the event
                    of any Empire termination of this Agreement pursuant to
                    Sections 15.4(d), 21.1(a), 21.1(b), 21.2, 21.4, 21.6 or
                    21.7, at Empire's option, if Empire chooses to acquire the
                    licenses for any such Generally Available Third Party
                    Systems Software, Empire shall pay the unamortized portion
                    of the license fees for such Software over a standard
                    straight line amortization period. With respect to such
                    Generally Available Third Party Systems Software, in the
                    event of any IBM termination of this Agreement pursuant to
                    Sections 21.1(c) or 21.2, or any Empire termination of this
                    Agreement pursuant to Section 21.3, Empire shall pay, and in
                    the case of a termination pursuant to Section 21.3, such
                    payment shall be Wind Down Costs pursuant to Section 21.3,
                    the unamortized portion of the license fees for such
                    Software over a standard straight-line amortization period.

               (B)  With respect to any refresh or acquisition of such Generally
                    Available Third Party Systems Software during the Term that
                    would result in IBM amortizing such Software during any
                    period of time after expiration of the Agreement: (I) prior
                    to undertaking such refresh or acquisition, IBM shall
                    provide notice to Empire of the fact that the refresh or
                    acquisition may result in Empire being responsible for the
                    unamortized portion of the license fees at the expiration of
                    the Agreement in accordance with this Section 7.3(e)(i)(B),
                    including the cost of such Software and the proposed
                    amortization period; (II) the Parties will discuss such
                    matter and seek to mutually agree as to how to approach such
                    refresh or acquisition, which could include agreement to a
                    shorter amortization period, at Empire or IBM's cost;
                    agreement that either IBM or Empire

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                    will be responsible for amortization costs after expiration
                    of the Agreement; or agreement not to proceed with the
                    refresh or acquisition; (III) in the event that the Parties
                    are unable to reach agreement under item (II), then Empire
                    shall have the right to direct IBM not to complete the
                    refresh or acquisition; and (IV) in the event that the
                    Parties agree not to proceed with any scheduled refresh or
                    Empire directs that there be no refresh, IBM's charges shall
                    be equitably reduced to reflect the fact that the refresh
                    was not completed (since such refresh is as of the Effective
                    Date included within the charges set forth in Schedule C).
                    As payment for the unamortized portion of the license fees
                    (amortized over a standard amortization period and not
                    back-end loaded) with respect to which IBM has followed the
                    foregoing process and with respect to. which Empire has
                    agreed under item (II) above to proceed with the refresh or
                    acquisition, then upon expiration of the Agreement, Empire
                    shall pay the unamortized portion of the Software, provided
                    that such amount shall be equitably reduced if the original
                    Term of the Agreement is extended pursuant to Section 4.2 or
                    Empire requests IBM to continue to provide Services after
                    the effective date of expiration pursuant to Section 21.9.
                    This Section 7.3(e)(i)(B) applies to expiration of the
                    Agreement and not termination of the Agreement.

               (C)  Notwithstanding the foregoing in this Section 7.3(e)(i),
                    with respect to Generally Available Third Party Systems
                    Software that IBM utilizes under an agreement which IBM
                    utilizes to provide services to multiple customers, IBM
                    shall procure for Empire, to be effective upon termination
                    or expiration of this Agreement, a license to each such
                    Software on commercially reasonable terms, at Empire's
                    expense; and

          (ii) with respect to non-Generally Available Third Party Systems
               Software, IBM shall either:

               (A)  prior to the introduction of such Software in providing the
                    Services during the Term, IBM shall comply with the
                    following:

                    (I)  IBM shall obtain the right to grant to Empire (or
                         Empire's designee): (1) perpetual, irrevocable,
                         worldwide, fully paid-up, nonexclusive license to Use
                         such Software, at no additional cost to Empire, at the
                         expiration or termination of this Agreement, and (2)
                         the right for Empire to continue to receive maintenance
                         for such Software after the expiration or termination
                         of this Agreement; and

                    (II) IBM shall determine whether the vendor for such
                         non-Generally Available Third Party Systems Software
                         will (1) grant such rights as set forth in Section
                         7.3(e)(ii)(A)(I) in favor of Empire; (2) grant such
                         rights in favor of Empire but only if a fee is paid to
                         such third party vendor; or (3) not grant such rights
                         in favor of Empire. In the event of the occurrence of
                         item (2) or (3) in the previous sentence, IBM shall
                         notify Empire in writing of its

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                         inability to obtain such license for Empire and of
                         available alternative licensing terms, and of the cost
                         and viability of any other software that can perform
                         the requisite functions and with respect to which IBM
                         has the ability to obtain such a license at no
                         additional cost to Empire or for a lower cost than the
                         proposed solution. Such notice shall contain the
                         proposed third party vendor's then current terms and
                         conditions (as provided by such vendor to IBM), if any,
                         for making the software available to Empire after the
                         applicable termination or expiration effective date.
                         With Empire's prior approval only (which Empire may
                         withhold in its sole discretion), IBM may introduce
                         such Software, for use in providing the Services. If
                         IBM uses any non-Generally Available Third Party
                         Systems Software to provide the Services without first
                         complying with the foregoing in this Section
                         7.3(e)(ii)(A)(II), IBM shall be responsible for (x)
                         procuring the rights required by Section
                         7.3(e)(ii)(A)(I); or (y) providing to Empire substitute
                         software that is Generally Available Software and has
                         the rights required by Section 7.3(e)(ii)(B) below
                         (such compliance as determined by Empire in its
                         discretion). IBM shall be financially responsible for
                         all costs and charges incurred in connection with such
                         efforts as provided in the previous sentence. Upon any
                         termination/expiration of this Agreement, if any
                         payment of fees is necessary to obtain from a third
                         party vendor such rights required by Section
                         7.3(e)(ii)(A)(I), then Empire shall be responsible for
                         such fees if IBM received Empire's advance written
                         approval to be responsible for such fees before IBM
                         introduced such non-Generally Available Third Party
                         Systems Software, and IBM shall be responsible for such
                         fees, if IBM did not receive Empire's advance written
                         approval to be responsible for such fees before IBM
                         introduced such non-Generally Available Third Party
                         Systems Software; or

               (B)  provide a license to substitute software that is Generally
                    Available Software, provided that such software shall: (I)
                    provide substantially the same functionality and performance
                    as the non-Generally Available Third Party Systems Software
                    it would replace; (II) be at no additional charge to Empire
                    (except for applicable ongoing license fees and maintenance
                    charges); and (III) be installed and integrated into the
                    Empire environment by IBM at no additional charge to Empire.

7.4  Rights in Newly Developed Software and Other Materials.

     (a)  Newly Developed Software Under Other Agreements. The Parties'
          respective rights and responsibilities with respect to software
          developed during the Term under the Licensing and Joint Development
          Agreement are set forth in the Licensing and Joint Development
          Agreement.

     (b)  Newly Developed Software.

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          (i)  Software developed pursuant to this Agreement by IBM (alone or
               jointly with others) shall consist of the following: (A)
               modifications to, or upgrades or enhancements (derivative works)
               of, Empire Software; (B) modifications to, or enhancements
               (derivative works) of, Third Party Software licensed to Empire;
               (C) modifications to, or enhancements (derivative works) of,
               Third Party Software licensed to IBM and developed under
               Schedules A-1 or A-5; and (D) new software which is not a
               modification to, or upgrade or enhancement (derivative work) of,
               Empire Software or IBM Software and which is developed under
               Schedules A-1 or A-5 (the foregoing, collectively, "Developed
               Empire Software"). Empire shall own and shall have all rights,
               title and interest (limited to the extent permitted by the terms
               of any governing Third Party Software licenses with respect to
               item (B) above) in and to Developed Empire Software and all
               copies made from them; provided that: (1) patents reading on such
               Developed Empire Software shall be jointly owned (as provided in
               and limited by Section 7.5(a) below), and (2) Empire shall own
               all copyrights and other intellectual property rights relating to
               such.

          (ii) The Parties acknowledge and agree that either Party may request
               that certain of the Development described in Schedule A-5 be
               performed pursuant to a Joint Development Addendum under the
               Licensing and Joint Development Agreement. If Empire agrees, the
               Parties shall enter into a Joint Development Addendum covering
               such development, and the intellectual property rights and
               licenses shall be as specified in Section 9.3 of the Joint
               Development Agreement. The charges paid by Empire pursuant to
               such Joint Development Addendum shall count towards Empire's
               obligation to purchase $30 million of Systems Integration (as
               specified in Section 4.1 of Schedule C), or to purchase $65
               million of Services (as specified in Section 4.2 of Schedule C),
               as applicable.

     (c)  Non-Software Materials. With respect to literary works or works of
          authorship (other than software) generated under this Agreement by IBM
          such as manuals, training materials and other materials containing
          IBM's technical or operational procedures, including the Procedures
          Manual and the Change Control Procedure ("Non-Software Materials"),
          the following shall apply: IBM and its Affiliates shall retain
          ownership of the Procedures Manual and pre-existing materials included
          in the Non-Software Materials and owned by IBM or its Affiliates prior
          to such use ("IBM Non-Software Materials"). IBM grants to Empire a
          perpetual, irrevocable, worldwide, fully paid up, non-exclusive
          license to use, copy, maintain, modify, enhance, distribute and create
          derivative works of IBM Non-Software Materials. Empire shall own the
          remainder of the Non-Software Materials ("Empire Non-Software
          Materials").

     (d)  Works Made for Hire.

          (i)  Developed Empire Software and Empire Non-Software Materials shall
               be deemed "works made for hire." To the extent any of the
               Developed Empire Software or Empire Non-Software Materials are
               not deemed "works made for hire" by operation of law, IBM hereby
               irrevocably assigns, transfers and conveys to Empire without
               further consideration all of its right, title and interest in
               such Developed Empire Software or Empire Non-Software Materials,

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               including all rights of copyright, trade secret or other
               proprietary rights in such materials, and patent rights subject
               to IBM's joint ownership of certain patent rights as described in
               the last sentence of Section 7.4(b)(i). IBM agrees to execute any
               documents or take any other actions as may reasonably be
               necessary, or as Empire may reasonably request, to perfect
               Empire's ownership of any such Developed Empire Software or
               Empire Non-Software Materials; should the law award ownership of
               any intellectual property right mentioned or unmentioned above to
               IBM or any IBM Personnel, agent or contractor, IBM shall take
               whatever steps are necessary to accomplish the intent of this
               Section 7.4(d).

          (ii) With respect to inventions discovered or developed by IBM or any
               IBM Personnel, agent or contractor, in the course of the
               performance of duties under this Agreement which are subject to
               joint ownership as described in the last sentence of Section
               7.4(b)(i), (each an "Invention"), IBM will disclose to Empire in
               writing any and all patent applications it files with respect to
               any such Invention. Moreover, IBM shall disclose to Empire in
               writing any Invention for which it chooses not to file a patent
               application, in order that Empire can determine whether to file a
               patent application for such Invention.

     (e)  With respect to this Section 7.4, Empire Software shall specifically
          exclude the Portal Toolkits and Framework Software, the rights to
          which software are set forth in the Licensing and Joint Development
          Agreement.

7.5  Patent Applications and Patent Infringement Claims.

     (a)  With respect to any patents which the Parties have agreed, pursuant to
          this Agreement, shall be jointly owned (as described in the last
          sentence of Section 7.4(b)(i)), the following shall apply: if IBM
          chooses to file a patent application with respect to any Invention,
          IBM shall be solely responsible for the expense of the patent
          application. With respect to all such patent applications filed by IBM
          with respect to Inventions, each Party shall own an undivided joint
          ownership interest in any patent issued in respect of any such
          Invention (including, but not limited to, the right to use and
          license), without a right of accounting to, or consent of, the other
          Party. IBM shall control prosecution of the Patent. Each Party shall
          provide the other Party all reasonable assistance in connection with
          the preparation or prosecution of any patent application filed by the
          other Party and shall cause to be executed all assignments and other
          instruments and documents as the other Party may consider necessary or
          appropriate to carry out the intent of this Section 7.5(a).

     (b)  If IBM chooses not to file a patent application with respect to any
          Invention, then (in addition to IBM's responsibility under the second
          sentence of Section 7.4(d)(ii)):

          (i)  upon notice from Empire to IBM that Empire may desire to apply
               for a patent or other form of protection for intellectual
               property rights for an Invention developed under the Agreement,
               IBM shall (A) keep and provide to Empire journals, logs, and
               other records sufficient for patent application purposes; (B)
               provide to Empire all such materials described in item (A) that
               pre-date Empire's notice to IBM of Empire's intent to file for a
               patent that are in IBM's

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               possession or are reasonably obtainable by IBM; and (C) upon
               reasonable request from Empire, have IBM employees and
               subcontractors meet with Empire and its counsel for the purpose
               of Empire's applying for and obtaining of such patent or other
               form of protection for intellectual property rights; and

          (ii) if Empire chooses to file a patent application with respect to
               any such Invention, Empire shall be solely responsible for the
               expense of the patent application, and Empire shall solely own
               any patent issued in respect of such Invention.

     (c)  IBM shall not (and shall cause its Affiliates not to) assert against
          Empire or any of its Affiliates any claim that any Empire Software
          developed under this Agreement by IBM (or its Affiliates and
          subcontractors) and as delivered by IBM infringes upon any patent
          owned or exclusively licensed to IBM or such Affiliate. This
          obligation shall survive termination or expiration of this Agreement.

     (d)  With respect to this Section 7.5, Empire Software shall specifically
          exclude the Portal Toolkits and Framework Software, the rights to
          which software are set forth in the Licensing and Joint Development
          Agreement.

7.6  Residual Knowledge.

     Either Party shall be free to use Residuals for any purpose, including use
     in the development, manufacturing, marketing and maintenance of its
     products and services, provided that such use does not infringe any valid
     patents or published or unpublished patent applications (including
     provisional applications), registered designs or copyrights of the other
     Party or third parties who have licensed or provided materials to the other
     Party. Notwithstanding the foregoing, this paragraph does not give a Party
     the right to use or disclose any Confidential Information consisting of:

     (a)  financial, statistical or personnel data of the other Party;

     (b)  the business plans of the other Party including, in the case of
          Empire, healthcare insurance products, services and ancillary
          services;

     (c)  Empire customer information;

     (d)  proprietary information of third parties made available to IBM;

     (e)  information that could reasonably be deemed to be uniquely developed
          for Empire that yields competitive advantage in the healthcare
          industry, except where such information is required to develop,
          implement or operate those elements of the Payor Services Offering (as
          defined in the Licensing and Joint Development Agreement) for which
          Revenue Sharing (as defined in the Licensing and Joint Development
          Agreement) is applicable;

     (f)  healthcare provider information;

     (g)  Protected Health Information; or

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     (h)  in the case where such Party is IBM, any J2EE compliant e-business
          architecture substantially similar to the J2EE compliant e-business
          architecture developed by Empire (or by a third party for Empire). For
          the purposes of clarification, an e-business architecture that is
          substantially similar to the e-business architecture developed by
          Empire shall mean an architecture that includes substantially similar
          methods, functions or design approaches to those incorporated into
          Empire's architecture, including Empire's software infrastructure
          topology, the application framework models, Empire's internal
          framework software implementation, real-time experience (web
          perspective) while batch mode processing, Empire's system and
          methodologies for achieving real-time claims processing, Empire's
          systems and methods of augmenting legacy data with XML, and all
          software development models as defined by the UML guidelines of
          software engineering. This Section 7.6(h) does not apply to non-unique
          implementations of the J2EE specification.

     Except for the license rights contained in this Article 7, neither this
     Agreement nor any disclosure made hereunder grants any license to either
     Party under any intellectual property rights of the other Party. The
     preceding sentence is not intended to diminish any rights available under
     this Section 7.6. This Section 7.6 shall survive termination/expiration of
     this Agreement.

7.7  Export.

     The Parties acknowledge that certain Software and technical data to be
     provided hereunder and certain transactions hereunder may be subject to
     export controls under the laws and regulations of the United States and
     other countries. Neither Party shall export or re-export any such items or
     any direct product thereof or undertake any transaction in violation of any
     such laws or regulations. To the extent within IBM's control, IBM shall be
     responsible for, and shall coordinate and oversee, compliance with such
     export laws in respect of such items exported or imported hereunder.

8.   FACILITIES

8.1  General.

     (a)  Subject to and pursuant to the Migration Plan, IBM shall perform the
          Services for Empire at the locations specified in this Agreement or at
          another mutually agreed location or locations as further specified
          below.

          (i)  IBM will deliver the Services from the Empire Facilities from
               which the Services are being provided as of the Effective Date,
               the IBM data center in Southbury, Connecticut (for remote
               operations) and Empire's Brooklyn, New York facility (Metrotech)
               in accordance with Empire's Metrotech relocation plan, except as
               follows: (A) the Help Desk Services will be provided from an IBM
               facility in Toronto, Canada; and (B) a portion of the
               Modernization Services and the Core Applications Services will be
               provided from the IBM facilities in Bangalore, India described in
               Section 8.3(a). The Parties acknowledge that their intent, at the
               time of the Effective Date, is to maximize the use of the IBM
               staff in Bangalore, India for performance of the Modernization
               Services.

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          (ii) IBM shall provide Data Center Services from the Staten Island
               Data Center for not less than twenty-four (24) months, unless
               otherwise mutually agreed, after which time IBM may provide the
               Data Center Services from a different facility, provided that IBM
               obtains Empire's prior written approval.

          (iii) IBM shall include in any proposal to relocate a site from which
               IBM delivers the Services, an assessment of whether such
               relocation will affect the taxes assessed on Empire's receipt of
               the Services.

     (b)  Any IBM-proposed relocation of the facilities from which any of the
          Managed Operations Services are provided is subject to the following:

          (i)  no less than 180 days before the proposed relocation, IBM shall
               provide notice of the proposed relocation and an analysis of the
               proposed impact to Empire;

          (ii) IBM shall develop a migration plan reasonably acceptable to
               Empire which is designed to minimize disruptions or degradation
               in Service to Empire during the migration period;

          (iii) IBM acknowledges that Empire's reasonable concerns with respect
               to the security, staffing, physical capabilities, and related
               factors of the new facility shall be a sufficient basis for
               Empire to withhold approval of such relocation;

          (iv) IBM shall assume financial responsibility for any of its
               transition costs, unless otherwise agreed by the Parties;

          (v)  IBM shall assume financial responsibility for Empire's increased
               operational costs and expenses incurred by Empire as a result of
               the relocation; provided that such costs and expenses are
               specified and mutually agreed in writing; and

          (vi) IBM acknowledges that Empire's reasonable concerns with respect
               to any proposed equitable adjustments to this Agreement relating
               to the relocation shall be a sufficient basis for Empire to
               withhold approval of such relocation.

     (c)  Any Empire-proposed relocation of facilities from which IBM delivers
          the Services may be subject to a mutually agreed equitable adjustment
          of the affected portions of this Agreement. Notwithstanding the
          foregoing sentence, there will be no equitable adjustment for the
          relocation to the Metrotech facility, provided, however, that Empire
          will be responsible for performing, at its expense, such relocation.

     (d)  If Empire reasonably requests the right to install telecommunications
          equipment in IBM facilities from which the Services are being
          provided, IBM shall cooperate and provide space to Empire for such
          telecommunications equipment, and shall provide Empire access to such
          facilities in order to maintain such equipment, provided that the
          installation, maintenance and operation of the telecommunications
          equipment is performed in accordance with any applicable IBM
          procedures.

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8.2  Staten Island Data Center.

     (a)  The Parties shall negotiate and, within thirty (30) days after the
          Effective Date, shall execute an agreement containing commercially
          reasonable terms, and having a term of ten (10) years with appropriate
          agreed-upon adjustments relating to the Term, pursuant to which Empire
          shall sublet to IBM Empire's Staten Island Data Center space (the
          "Staten Island Data Center Sublease"). In the event that the Parties
          fail to execute the Staten Island Data Center Sublease within such
          thirty (30) day period, then, either Party may initiate the informal
          dispute resolution procedure specified in Section 20.1.

     (b)  With respect to any IBM termination of this Agreement pursuant to
          Section 21.1(c) or 21.2 or Empire termination of this Agreement
          pursuant to Section 21.3, 21.4, or 21.5 IBM shall have the option, for
          ninety (90) days after the non-terminating Party's receipt of such
          notice of termination, to terminate the Staten Island Data Center
          Sublease, with such termination to be effective no less than four (4)
          months and no more than nine (9) months after the date of such notice
          of termination, subject to Empire's right to receive
          Termination/Expiration Assistance pursuant Section 21.10. With respect
          to any Empire notice of termination of this Agreement pursuant to
          Section 15.4(d), 21.1(a), 21.1(b), 21.2, 21.6 or 21.7, Empire shall
          have the option, for ninety (90) days after IBM's receipt of such
          notice of termination, to terminate the Staten Island Data Center
          Sublease, with such termination to be effective no less than four (4)
          months and no more than nine (9) months after the date of such notice
          of termination, subject to Empire's right to receive
          Termination/Expiration Assistance pursuant Section 21.10. In the event
          that either Party terminates the Agreement pursuant to the previous
          two sentences, but the Party with the option to terminate the Staten
          Island Data Center Sublease chooses not to terminate the sublease,
          then at Empire's option, the following shall apply: (i) the Parties
          shall amend the Staten Island Data Center Sublease to further sublease
          back to Empire such data center space in the Staten Island Data Center
          as Empire identifies, if any (the "New Sublease"); (ii) the New
          Sublease shall be on the same terms and conditions as the original
          Staten Island Data Center Sublease; and (iii) charges to Empire shall
          be based on the proportionate share of the space being leased to
          Empire as compared to the entire premises, using the same rent as in
          the Staten Island Data Center Sublease, and there shall be no mark-up
          of such charges.

     (c)  Upon Empire's request, IBM shall use Commercially Reasonable Efforts
          (but not including payment of fees) to assist Empire in obtaining the
          consent of Prime Sublandlord and Prime Landlord (both as to be defined
          in the Staten Island Data Center Sublease) to the Staten Island Data
          Center Sublease, and will cooperate with Empire in this regard.
          Without limiting the generality of the foregoing sentence, it is
          specifically agreed that, concurrently with the execution of this
          Agreement and to the extent required to obtain the consent of Prime
          Sublandlord and Prime Landlord, IBM shall deliver to Empire (i) a
          certified income statement, and (ii) a written authorization to
          perform a credit check on IBM. Such items (and the resulting credit
          check) as described in items (i)-(ii) may be delivered by Empire to
          Prime Sublandlord and/or Prime Landlord.

     (d)  If IBM has not relocated Empire out of the Staten Island Data Center
          on or before the date that is thirty-six (36) months after the
          Effective Date, IBM agrees to make improvements to the Staten Island
          Data Center space necessary to allow such space to support additional
          commercial customers, and consisting of a minimum investment of

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          $7.75 million, of which Empire shall be responsible for its
          proportionate share upon Empire approval of such improvements, all as
          described in Schedule C.

     (e)  If the Data Center Services are relocated from the Staten Island Data
          Center to another location during the Term, IBM shall pay to Empire,
          prior to relocating Empire out of the Staten Island Data Center, an
          amount equal to what would have been the unamortized cost of the
          leasehold improvements paid for by Empire pursuant to Section 8.2(d)
          above and Schedule C, as if such cost was being charged to Empire over
          the remaining term of this Agreement.

     (f)  IBM shall cooperate and work with the lessor of the Staten Island Data
          Center, Merrill Lynch, as necessary to provide the Services.

     (g)  In the event that IBM materially breaches the Staten Island Data
          Center Sublease, subject to any cure provisions set forth in the
          Staten Island Data Center Sublease, Empire shall have the right to
          terminate, at no cost, the Data Center Services.

8.3  IBM Facility in India.

     (a)  IBM shall be responsible for providing the facility located at: IBM
          Global Services Pvt. Limited, Subramanya Arcade, Bannerugetta Road,
          Bangalore, India, from which IBM shall provide Core Applications
          Services. The space in such facility from which Services will be
          provided for Empire shall be contiguous, or otherwise as approved by
          Empire. Up to the demarcation points specified in Section 2.1(w) of
          the Telecommunications Connectivity Services Schedule, such facility
          shall comply with the India Facility Specifications, attached hereto
          as Schedule S. IBM shall provide the facility in time so that the Core
          Applications Services may be transitioned to India in accordance with
          the Migration Plan, attached as Schedule H. IBM shall provide space in
          the facility, at no charge to Empire, for Empire employees and
          consultants, as requested by Empire. IBM shall also provide the items
          described in Section 8.5(b) which Empire is providing with respect to
          the Empire Facilities.

     (b)  In the event that IBM establishes, in its discretion, an e-health
          utility facility in Bangalore, India (the "e-Health Utility
          Facility"), then Empire shall have the option to have its Services
          provided from such facility.

8.4  Disaster Recovery Sites.

     If an IBM facility from which Services are provided (or prior to the
     completion of the Migration to India, will be provided) becomes unavailable
     (and subject to the applicable disaster recovery provisions of this
     Agreement) and a temporary facility is required in order to provide the
     Services, the Parties agree that:

     (a)  if the unavailable IBM facility is located in the United States, the
          temporary facility shall be located in the United States;

     (b)  if the unavailable IBM facility is located in Canada, the temporary
          facility shall be located in the United States or Canada;

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     (c)  if the unavailable IBM facility is located outside of the United
          States or Canada, the temporary facility may be located as IBM elects,
          subject to the other applicable provisions of the Agreement;

     (d)  regardless of the location of the temporary IBM facility, the charges
          payable by Empire for Services provided from the temporary IBM
          facility shall be at the same rate as if such Services were being
          provided prior to the disaster event at the originally planned
          facility (i.e., as if such Services were being provided from the
          now-unavailable IBM facility); and

     (e)  Services shall be provided from the temporary IBM facility only for
          such time as the recovery requires and until the original IBM facility
          can be rendered fit for providing the Services.

     If the original IBM facility is permanently unavailable, a permanent site
     shall be reasonably proposed by IBM and subject to Empire's approval,
     including that Empire can require, at Empire's option, that the limitations
     in items (a)-(d) above apply.

8.5  Empire Obligations.

     (a)  Subject to Section 8.6, Empire will provide to IBM, and IBM shall
          utilize in providing the Services, the Empire Facilities from which
          Empire provided services similar to the Services prior to the
          Effective Date, or comparable facilities designated by Empire. IBM
          shall be responsible for providing the other facilities and support it
          needs to provide the Services. Empire will retain the costs of
          applicable facilities leases and related leasehold improvements with
          respect to the Empire Facilities. For those Empire Facilities that are
          leased facilities, IBM shall comply with the applicable leases, as
          directed by Empire.

     (b)  Empire will provide IBM at no charge with the use of space at the
          Empire Facilities as used by Empire prior to the Effective Date to
          provide the Services. This includes heat, light, power, air
          conditioning, uninterruptible power supply (if any), and other similar
          utilities, office space, furniture, secure storage space and equipment
          staging facilities, telephone service in support of the Services,
          office support services (including security and janitorial), and
          coordination of Empire Facility access security requirements to be
          used by IBM in support of the Services. Empire will provide IBM with
          the same or similar access to Empire's workplace services, such as
          parking and cafeteria facilities, if any, as Empire provides to its
          employees. These requirements will be reduced consistent with the
          staffing plan and Migration Plan reductions as those activities are
          completed. Except as provided in this Agreement, Empire shall have no
          responsibilities to IBM with respect to the Empire Facilities.

     (c)  Each Transitioned Employee (and his or her immediate replacement) will
          use the workstation, if any, that such Transitioned Employee utilized
          immediately prior to the Effective Date, and IBM will provide
          technical support for such workstations, until the end of the
          applicable lease. Until the expiration of the applicable lease,
          maintenance for such workstations shall be provided under the terms of
          the applicable lease. At the expiration of the applicable lease, IBM
          will return to Empire and IBM will replace such workstations at its
          expense, and IBM shall provide associated support and maintenance for
          such replaced workstations.

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     (d)  Empire will inform IBM of any plans or determination to relocate the
          Empire Facilities so that IBM will have a reasonable amount of time to
          prepare for and implement such change or relocation as it impacts IBM.

8.6  IBM Obligations.

     (a)  IBM shall use the Empire Facilities for the sole and exclusive
          purposes of providing the Services under this Agreement. The use of
          Empire Facilities by IBM does not constitute a leasehold or other
          property interest in favor of IBM.

     (b)  IBM shall use the Empire Facilities in a manner that is coordinated,
          and does not interfere, with Empire's business operations. To the
          extent that IBM operates the space in a manner that materially and
          unnecessarily increases facility or other costs incurred by Empire,
          Empire shall notify IBM of such costs and IBM shall take such steps as
          may be necessary to reduce such facility costs to a level reasonably
          acceptable to Empire. IBM shall be responsible for any damage to the
          Empire Facilities resulting from the abuse, misuse, or negligence of
          IBM or other failure to comply with its obligations respecting the
          Empire Facilities, and Empire shall have the right to set off the
          reasonable and actual cost of repairing any such damage against
          charges payable to IBM under this Agreement, in accordance with
          Section 14.6.

     (c)  IBM shall keep the Empire Facilities in good order, not commit or
          permit IBM personnel to commit waste or damage to Empire Facilities or
          use Empire Facilities for any unlawful purpose or act, and shall
          comply with Empire's standard policies and procedures and with
          applicable leases as these are made available to IBM regarding access
          to and use of the Empire Facilities, including procedures for the
          physical security of the Empire Facilities.

     (d)  IBM shall not make improvements or changes to the Empire Facilities
          without Empire's prior written approval. Any improvements to the
          Empire Facilities will become the property of Empire.

     (e)  When the Empire Facilities are no longer required for performance of
          the Services, IBM shall restore the Empire Facilities to substantially
          the same condition as when IBM began use of them in the case of (i)
          damage caused by IBM or its agents (subject to reasonable wear and
          tear); and (ii) unauthorized changes to the Facilities.

8.7  Migration.

     (a)  During the period beginning on the Effective Date and in accordance
          with the dates set forth in the Migration Plan, as described below,
          IBM shall plan, prepare for, conduct and complete the migration and
          transition of the data center, core applications and help desk
          operations (the "Migration"). IBM's responsibilities with respect to
          the Migration, as set forth in this Section 8.7, are referred to as
          the "Migration Services." Such Migration Services include:

          (i)  establishing communications lines and network connections on
               IBM's side of the demarcation points provided in Section 2.1(w)
               of the Telecommunications Connectivity Schedule and as required
               for IBM to access its own internal

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               systems and facilities, and providing Equipment, Software, tapes,
               records and supplies, as made necessary by the Migration;

          (ii) maintaining without unplanned disruption the Services and not
               otherwise unnecessarily disrupting Empire's business operations;

          (iii) paying all costs associated with the Migration, including
               in-scope communications lines costs (both installation and
               ongoing); and

          (iv) otherwise performing such migration tasks as are necessary to
               enable IBM to provide the Services, including following the
               Migration.

     (b)  IBM will designate an individual who will be authorized to act as
          Empire's primary contact with respect to the Migration (the "IBM
          Migration Manager"). IBM will further designate an individual for Data
          Center, Help Desk and Core Applications who will manage the Migration
          for such Services (each a "Tower Migration Manager"). IBM will not
          remove the individuals serving as the IBM Migration Manager and the
          Tower Migration Managers during such period of time from the Effective
          Date through the completion of the Migration, unless any such
          individual (i) voluntarily leaves IBM; (ii) is removed because of
          performance reasons; or (iii) is physically unable to perform the
          tasks required (e.g., because of sickness or accident).

     (c)  The Migration shall be conducted in accordance with the SMI Process
          (as defined in Schedule A-1) and with a written plan (the "Migration
          Plan") which shall include:

          (i)  a description of the Services being migrated;

          (ii) a description of the methods and procedures, personnel (including
               skill sets and allocation) and organization IBM will use to
               perform the Migration;

          (iii) a schedule of Migration activities, including a project plan
               from beginning until production cutover, including milestones,
               risks and risk management plans;

          (iv) personnel information, such as years worked and years with
               information technology experience and other relevant
               qualifications, for the IBM Migration Manager and the Tower
               Migration Managers and other key employees, as reasonably
               specified by Empire;

          (v)  a detailed description of the respective roles and
               responsibilities of Empire and IBM;

          (vi) such other information and planning as are necessary to ensure
               that the Migration takes place on schedule and without unplanned
               disruption to Empire operations; and

          (vii) a process by which Empire may require IBM to stop proceeding
               with all or any part of the Migration if Empire determines in
               good faith that such Migration, or any part of such Migration,
               poses a material risk or hazard to Empire's business interests.

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     (d)  The draft of the Migration Plan as of the Effective Date is attached
          to this Agreement as Schedule H. IBM shall be responsible for revising
          and finalizing the Migration Plan, provided that: (i) IBM shall
          cooperate and work closely with Empire in making changes to the
          Migration Plan; and (ii) any changes to the Migration Plan and
          subsequent versions of the Migration Plan shall be subject to mutual
          written agreement by the Parties.

     (e)  Except (i) with Empire's prior written consent, or (ii) if necessary
          in the event of an emergency such that it would be impractical for IBM
          to obtain such prior written consent (and solely for so long as the
          emergency continues), IBM shall perform the Migration in accordance
          with the Migration Plan and the Change Control Procedure. Empire shall
          cooperate and provide reasonable assistance with respect to the
          Migration as specified in the Migration Plan or as otherwise requested
          reasonably in advance by IBM.

     (f)  During the Migration, the Tower Migration Managers shall report weekly
          to IBM and Empire regarding the status of the Migration.

     (g)  No functionality of the Services being migrated shall be disabled
          until the new location has capabilities as required to provide the
          Services.

     (h)  Implementation of a Critical Milestone in the Migration Plan which
          constitutes a transfer of responsibility to IBM shall be subject to
          Empire's written approval.

     (i)  If the Migration is not completed on or before the dates set forth in
          each Migration Plan (the "Migration Completion Dates"), then to the
          extent that such failure is due to the fault of IBM or its
          subcontractors, IBM shall continue to take any and all actions, at
          IBM's expense, necessary to cause the Services to be provided to
          Empire until such time as the incomplete portion of the Migration is
          complete and IBM is able to provide the Services to Empire.

9.   PERFORMANCE STANDARDS

9.1  General.

     IBM shall perform the Services at least at the same level and with at least
     the same degree of accuracy, quality, completeness, timeliness,
     responsiveness and efficiency as was provided prior to the Effective Date
     by or for Empire. Quantitative performance standards for certain of the
     Services ("Service Levels") are set forth in Schedule B. At all times IBM's
     level of performance shall be at least equal to the Service Levels.

9.2  Failure to Perform.

     (a)  In the event of an Equipment or Software failure, or if IBM fails to
          meet a Performance Standard, IBM shall (i) investigate, assemble and
          preserve pertinent information with respect to, and report on the
          causes of, the problem, including performing a root cause analysis of
          the problem; (ii) advise Empire, as and to the extent requested by
          Empire, of the status of remedial efforts being undertaken with
          respect to such problem; (iii) minimize the impact of the problem, use
          Commercially Reasonable Efforts to correct the problem, and begin
          meeting the Performance Standard (if impacted); and (iv) take
          appropriate preventive measures so that the problem does not recur. As
          part of such

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          efforts, the staff of the various technical disciplines at IBM shall
          work in a collaborative environment (including within reliability
          meetings and by coordinating with Empire): (A) to identify offending
          system(s) contributing to such failures or outages, and (B) to
          determine the singular point of failure and reason for that failure.

     (b)  IBM recognizes that its failure to meet Critical Service Levels (as
          set forth in Schedule B) may have a material adverse impact on the
          business and operations of Empire and that the damage from IBM's
          failure to meet a Critical Service Level is not susceptible of precise
          determination. Accordingly, in the event that IBM fails to meet any
          Critical Service Level for reasons other than the actions or omissions
          of Empire or circumstances that constitute force majeure under this
          Agreement, then in addition to any non-monetary remedies available to
          Empire under this Agreement, at law or in equity, Empire may elect in
          lieu of pursuing other monetary remedies to recover as its sole and
          exclusive monetary remedy for such failure to meet Critical Service
          Levels the Service Level Credits specified in Schedule B as liquidated
          damages. Empire may, in the alternative, elect to make a claim for
          damages against IBM with respect to such failure, provided that:

          (i)  Empire notifies IBM within eighteen (18) months from the date
               that Empire received the invoice reflecting the Service Level
               Credit(s) that are related to the failure upon which such claim
               will be or is based. This Section 9.2(b) shall not limit Empire's
               rights with respect to the events upon which Empire may rely as a
               basis for Empire's termination of this Agreement for cause.

          (ii) In the event Empire so notifies IBM, Empire shall refund to IBM
               the Service Level Credits(s) associated with IBM's failure to
               meet Service Level(s) upon which Empire's claim will be or is
               based. In the event Empire makes such an election pursuant to the
               previous item (i) and Empire reimburses IBM for such Service
               Level Credit(s), the Service Level Credits paid previously by IBM
               for the period covered by the refunded Service Level Credits
               shall be recalculated, as if the refunded Service Level(s)
               was/were never missed (e.g., if the total Service Levels Credits
               paid by IBM in any month during such period exceeded the Amount
               at Risk (as defined in Schedule B), then such Service Level
               Credits shall be recalculated, and Service Level Credits that
               previously exceeded the Amount at Risk that, after the foregoing
               recalculation, fall within the Amount at Risk shall be paid by
               IBM to Empire).

          (iii) Empire shall not be required to reimburse IBM for the Service
               Level Credit(s) as described above in item (ii), if and while the
               Parties are attempting to resolve the issue in accordance with
               Section 20.1; instead, Empire shall only be required to reimburse
               such Service Level Credit(s) if Empire elects to make a formal
               claim for damages in a court of law.

     (c)  In the event that any IBM Service failure under this Agreement results
          in Empire being assessed a performance guarantee penalty to Empire's
          customer, IBM ("Customer"), under Empire's customer agreement with
          such Customer, then IBM shall be responsible for the full amount of
          such performance guarantee penalty to be paid to such Customer.

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9.3  Periodic Reviews.

     At least annually Empire and IBM, as more fully described in Schedule B,
     shall review the Service Levels and shall make appropriate adjustments to
     them at least annually, as mutually agreed, to reflect improved performance
     capabilities associated with advances in the technology and methods used to
     perform the Services. The Parties expect and understand that the Service
     Levels will be improved over time.

9.4  Measurement and Monitoring Tools.

     Initially, IBM shall have access to and use measurement and monitoring
     tools as utilized and implemented by Empire immediately prior to the
     Effective Date. IBM shall implement and utilize the necessary measurement
     and monitoring tools and procedures required to measure and report IBM's
     performance of the Services against the Service Levels as specified in
     Schedule B. Empire shall have the right to approve such measurement and
     monitoring tools and procedures prior to implementation by IBM. Such
     measurement and monitoring shall permit reporting at a level of detail
     sufficient to verify compliance with the Service Levels, and shall be
     subject to audit by Empire. IBM shall provide Empire with information and
     access to such tools and procedures upon request, for purposes of
     verification. IBM shall implement, and maintain software currency for (to a
     currency of n-1, as defined in Attachment A2-B to Schedule A-2), the agreed
     to modules of the Tivoli software, in accordance with the Help Desk
     Migration Plan and Section 3.1(h) of the Help Desk Services Schedule, as
     its tool to track and provide notification with respect to Equipment and
     Software failures.

9.5  Customer Survey.

     IBM and Empire shall conduct a survey each year of the Empire user
     community that is designed to determine the level of user satisfaction. IBM
     and Empire will mutually agree on the form and content of the surveys,
     which shall include representative samples of each major category of user
     within Empire and an agreed upon number of in-depth face-to-face or
     telephone interviews. The Parties will jointly review the results of the
     surveys, and in those areas where users are dissatisfied, IBM will develop
     and implement a plan to improve user satisfaction. Empire's satisfaction
     shall be an element of IBM employees' personal measurements and a key
     factor in determining business unit success. Such factors shall comprise a
     significant percentage of the variable incentive compensation pay of each
     individual holding a Key IBM Position, including as set forth in Section
     5.1(a)(ii).

10.  PROJECT AND CONTRACT MANAGEMENT

10.1 Governance Board.

     The Parties shall form a governance board to facilitate communications
     between them (the "Governance Board"). The Governance Board shall be
     composed of senior management of both Empire and IBM, and such other
     persons as may be mutually agreed by the Parties. The Governance Board
     shall provide general oversight and guidance to the Parties, including
     serving as the arbiter with respect to issues arising during and from
     meetings, committees, and work groups formed by the Parties (e.g., change
     request, reliability).

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10.2 Reports and Meetings.

     (a)  Reports.

          (1)  As of the Effective Date, IBM shall provide Empire the periodic
               reports set forth in Schedule K, and within thirty (30) days
               after the Effective Date, the Parties shall determine (as
               discussed below) additional periodic reports to be issued by IBM
               to Empire. Such reports shall (i) be no less comprehensive than
               the internal reporting of Empire prior to the Effective Date; and
               (ii) be issued at the frequency reasonably requested by Empire.
               All Empire reports which were web-enabled by Empire prior to the
               Effective Date shall be web-enabled by IBM, and IBM shall provide
               Empire access to such information as of the Effective Date. As
               one such report, IBM shall provide a monthly performance report,
               which shall be delivered to Empire within fifteen (15) days after
               the end of each month, describing IBM's performance of the
               Services in the preceding month (the "Monthly Performance
               Report"). Such Report shall:

               (A)  separately address IBM's performance in each area of the
                    Services;

               (B)  for each area of the Services, assess the degree to which
                    IBM has attained or failed to attain the pertinent
                    objectives in that area, including with respect to the
                    Service Levels;

               (C)  explain deviations from the Performance Standards and
                    include a plan for corrective action where appropriate;

               (D)  describe the status of problem resolution efforts, ongoing
                    projects, and other initiatives, and the status of IBM's
                    performance with respect to change requests;

               (E)  set forth a record of the material Equipment, Software and
                    personnel changes that pertain to the Services and describe
                    planned changes during the upcoming month that may affect
                    the Services;

               (F)  set forth the utilization of resources for the month and
                    report on utilization trends and statistics; and

               (G)  include such documentation and other information as Empire
                    may reasonably request to verify compliance with, and
                    meeting the objectives of, this Agreement.

          (ii) Within thirty (30) days after the Effective Date, the Parties
               shall determine additional periodic reports that shall be issued
               by IBM to Empire. IBM shall provide Empire with suggested formats
               for such reports for Empire's review and approval. Within ninety
               (90) days after the Effective Date, IBM shall commence providing
               such additional reports to Empire.

     (b)  Meetings. Within thirty (30) days after the Effective Date, the
          Parties shall determine an appropriate set of meetings to be held
          between representatives of Empire and IBM. IBM shall prepare and
          circulate an agenda sufficiently in advance of each such meeting to

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          give participants an opportunity to prepare for the meeting. IBM shall
          incorporate into such agenda items that Empire desires to discuss. IBM
          shall prepare and circulate minutes promptly after a meeting, although
          Empire shall not be bound thereto and shall be under no obligation to
          correct or object to any errors therein. As of the Effective Date,
          such meetings shall include the following:

          (i)  a weekly meeting of the Empire Contract Executive and the IBM
               Project Executive to discuss day-to-day operations and such other
               matters as appropriate;

          (ii) the three-times-weekly Empire reliability meeting;

          (iii) a weekly environment change control meeting;

          (iv) a weekly meeting to discuss change requests;

          (v)  a daily (or otherwise agreed) mid-tier infrastructure meeting;

          (vi) a weekly senior management team ("SMT") meeting;

          (vii) a monthly, or as requested by Empire, management meeting of the
               Governance Board to review the reports for the quarter, review
               IBM's overall performance under the Agreement, review progress on
               the resolution of issues, provide a strategic outlook for
               Empire's IT requirements, discuss and attempt to resolve any
               issues arising under the Agreement (as provided in Section 10.1),
               and discuss such other matters as appropriate; and

          (viii) such other meetings between Empire representatives and IBM
               Personnel reasonably requested by either Party as necessary to
               address performance of the Services.

10.3 Procedures Manual.

     (a)  The "Procedures Manual" shall describe how IBM shall perform and
          deliver the Services under this Agreement, the Equipment and Software
          being used, and the documentation (e.g., operations manuals, user
          guides, specifications) which provide further details of such
          activities. The Procedures Manual shall also describe any actions
          required by Empire in its receipt of the Services. The Procedures
          Manual shall describe the activities IBM proposes to undertake in
          order to provide the Services, including those direction, supervision,
          monitoring, staffing, reporting, planning and oversight activities
          normally undertaken to provide services of the type IBM is to provide
          under this Agreement. The Procedures Manual also shall include
          descriptions of the acceptance testing and quality assurance
          procedures approved by Empire, IBM's problem management and escalation
          procedures, and the other standards and procedures of IBM pertinent to
          Empire's interaction with IBM in obtaining the Services.

     (b)  Within sixty (60) days after the Effective Date, IBM shall deliver a
          draft Procedures Manual to Empire, for Empire's comments and review.
          IBM shall incorporate reasonable comments or suggestions of Empire and
          shall finalize the Procedures Manual within thirty (30) days after
          IBM's receipt of comments from Empire. The final

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          Procedures Manual shall be subject to the approval of Empire. IBM
          shall periodically (and no less frequently than every calendar
          quarter) update the Procedures Manual to reflect changes in the
          operations or procedures described therein. Updates of the Procedures
          Manual shall be provided to Empire for review, comment and approval.
          IBM shall perform the Services in accordance with the Procedures
          Manual. The Procedures Manual shall not be used to amend this
          Agreement. In the event of a conflict between the provisions of this
          Agreement and the Procedures Manual, the provisions of this Agreement
          shall control.

10.4 Change Control.

     (a)  The responsibility for establishing the IT architecture, standards and
          strategic direction of Empire shall at all times remain with Empire.
          IBM, in performing the Services, shall conform to and shall support
          such architecture, standards and strategic direction. Any changes to
          the Services required for such conformance shall be implemented
          through the Change Control Procedures.

     (b)  IBM shall be responsible for all changes to Empire's IT environment
          pertaining to the Services, including changes to programs, manual
          procedures, chron jobs, distribution parameters and schedules. IBM
          shall comply with the following change control requirements:

          (i)  Prior to using any new Software or new Equipment to provide the
               Services, IBM shall have verified that the item has been properly
               installed, is in good working order, and is performing in a
               reliable manner.

          (ii) IBM shall not make the following changes, including implementing
               a change in technology or equipment and software configuration,
               without first obtaining Empire's approval, which approval Empire
               may withhold in its sole discretion: (A) a change adversely
               affecting the function or performance of, or decreasing to any
               significant degree the resource efficiency of, the Services; (B)
               a change increasing Empire's charges under this Agreement or
               other costs or fees of Empire; (C) a change inconsistent with the
               IT architecture, standards or strategic direction specified by
               Empire; or (D) a change impacting the way in which Empire
               conducts its business or operations which impact Empire considers
               to be adverse. IBM may make temporary changes required by an
               emergency if it has been unable to contact an appropriate Empire
               manager to obtain such approval after making Commercially
               Reasonable Efforts, provided that IBM works diligently to remove
               the need for such emergency change. IBM shall document and
               promptly report such emergency changes to Empire, which changes
               then shall be subject to Empire's approval hereunder.

          (iii) IBM shall move programs from development and test environments
               to production environments in a controlled manner using the
               Empire promotion to production procedures which will be included
               in the Procedures Manual, so that no changes are introduced into
               the programs during such activity, and with the full capability
               of restoring to the prior state until the programs have been
               established as fully operational.

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     (c)  As of the Effective Date, Empire's change control procedures in effect
          as of the Effective Date shall govern changes to the Services and upon
          mutual acceptance, the Change Control Procedure shall govern such
          changes.

     (d)  Within forty-five (45) days after the Effective Date, IBM shall
          prepare and provide to Empire a "Change Control Procedure" detailing
          how IBM will comply with the requirements set forth in this Section
          10.4 and otherwise control changes to Empire's IT environment
          pertaining to the Services. The Change Control Procedures shall not be
          used to amend the terms of this Agreement and shall be consistent with
          Section 10.4(b)(ii) above. IBM shall incorporate reasonable comments
          or suggestions of Empire and shall finalize the Change Control
          Procedure within thirty (30) days after receiving Empire's comments.
          The final Change Control Procedure shall be subject to the approval of
          Empire. The Change Control Procedures shall be included as part of the
          Procedures Manual, and IBM shall perform the Services in accordance
          with the Change Control Procedures. In the event of a conflict between
          the provisions of this Agreement and the Change Control Procedure, the
          provisions of this Agreement shall control.

10.5 Use of Subcontractors and Other Support.

     (a)  IBM will not delegate or subcontract, without Empire's prior written
          approval: (i) any of its material obligations, (ii) obligations that
          are material to any particular function constituting a part of the
          Services under this Agreement, or (iii) a material function or portion
          of the Services. In seeking Empire's approval, IBM will specify in
          writing to Empire: (A) the specific components of the Services that
          IBM proposes to subcontract, (B) the scope of the proposed
          subcontract, and (C) the identity and qualifications of the proposed
          subcontractor. At Empire's request, IBM shall forward to Empire a
          description of the scope and material terms (other than financial) of
          the subcontract or proposed subcontract. Empire shall have the right
          to approve or disapprove of proposed subcontractors in its sole
          discretion. Schedule L contains a list of subcontractors that Empire
          has approved and the specific Services that each subcontractor is
          authorized to provide.

     (b)  Empire shall have the right to revoke its prior approval of a
          subcontractor, or for those instances where no prior approval was
          given, to request that an IBM subcontractor be removed, and in either
          case IBM shall remove such IBM subcontractor from the Empire account
          if: (i) the subcontractor's performance is materially deficient; (ii)
          the subcontractor is bought by an Empire Competitor, or enters the
          health insurance business; or (iii) there have been material
          misrepresentations by or concerning the subcontractor.

     (c)  IBM shall remain responsible for obligations, services and functions
          performed by subcontractors to the same extent as if such obligations,
          services and functions were performed by IBM employees, and for
          purposes of this Agreement such work shall be deemed work performed by
          IBM. Any delegation or subcontracting by IBM in violation of this
          Section 10.5 shall be null and void. IBM shall be Empire's sole point
          of contact regarding the Services, including with respect to payment.
          IBM shall not disclose Confidential Information of Empire to a
          subcontractor unless and until such subcontractor has agreed in
          writing to protect the confidentiality of such Confidential

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          Information in a manner substantially equivalent to that required of
          IBM under this Agreement.

     (d)  To the extent subcontractors, agents, representatives and other
          entities perform, or otherwise provide support to IBM related to, the
          Services, IBM shall cause such entities to comply with the applicable
          obligations and restrictions under this Agreement.

10.6 Technology Plan.

     IBM shall prepare an annual technology plan in accordance with the
     provisions of this Section and subject to Section 10.4(a) (the "Technology
     Plan"). Each Technology Plan after the first shall review and assess the
     immediately preceding Technology Plan. The Technology Plan shall consist of
     a three-year plan and an annual implementation plan as described below.

     (a)  Three-Year Plan. The Technology Plan shall include a comprehensive
          assessment and strategic analysis of Empire's then-current IT systems
          and services for the next three (3) years, including an assessment of
          the appropriate direction for such systems and services in light of
          Empire's business priorities and strategies and competitive market
          forces (to the extent such business information is provided by Empire
          to IBM). The Technology Plan shall include a specific identification
          of proposed software and hardware strategies and direction, a cost
          projection, a cost/benefit analysis of any proposed changes, a
          description of the types of personnel skills and abilities needed to
          respond to any recommended changes or upgrades in technology, a
          general plan and a projected time schedule for developing and
          achieving the recommended elements, and references to appropriate
          information services operations platforms that support service level
          requirements, exploit industry trends in production capabilities and
          provide potential price performance improvement opportunities.

     (b)  Annual Implementation Plan. As necessary to support the overall
          objectives and directions of the three-year plan, the annual
          implementation plan shall provide specific guidance as to the
          information services requirements, projects and plans for the upcoming
          year, including details on operations, maintenance backlog and
          development activities. The annual implementation plan shall include a
          summary review of IBM's performance of the Services in the year then
          concluding, and shall provide updates and revisions of the long-term
          plan as appropriate. An annual implementation plan shall be prepared
          for each year of the Agreement. As part of the process for preparing
          the annual implementation plan, the Parties shall review the overall
          operation of the Agreement to ensure that the Services continue to
          meet Empire's strategic IT requirements.

     (c)  Drafting Responsibility. IBM shall submit to Empire a draft of each
          Technology Plan for Empire's review and approval, which draft shall
          have been developed with input from key business users of Empire. IBM
          shall submit the final Technology Plan within fifteen (15) days of
          receiving Empire's comments. The draft of the Technology Plan for the
          first year shall be provided within three (3) months after the
          Effective Date and shall be in support of calendar year 2003.

     (d)  Technology Plan Timing and Update. The schedule for developing and
          delivering each Technology Plan shall be coordinated to support
          Empire's annual business planning cycle. The Technology Plan shall be
          updated during the year as necessary to reflect

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          changes in the business of Empire which materially impact the validity
          of the then-existing Technology Plan. IBM shall recommend
          modifications to the Technology Plan as it deems appropriate, and
          shall revise the Technology Plan as requested or approved by Empire.

10.7 Quality Assurance and Improvement Programs.

     IBM, as part of its total quality management process, shall provide quality
     assurance and quality improvement through: (a) the identification and
     application of proven techniques and tools from other installations within
     its operations; and (b) the implementation of concrete programs, practices
     and measures designed to improve Performance Standards. Such procedures
     shall include checkpoint reviews, testing, acceptance, and other procedures
     for Empire to confirm the quality of IBM's performance, and shall be
     included in the Procedures Manual. IBM shall utilize project management
     tools, including productivity aids and project management systems, as
     appropriate in performing the Services.

10.8 Premier Customer Status.

     (a)  IBM acknowledges that it will treat Empire as a "premier customer" and
          as such, IBM shall provide Empire the following:

          (i)  annual access to IBM research briefings, including insight into
               unannounced products and research investments that are applicable
               to Empire's business;

          (ii) quarterly briefings on available technology and process and
               procedure improvements permitting utilization and implementation
               as approved and authorized through the contract management
               processes; and

          (iii) [**]

     (b)  Additionally, IBM shall provide Empire, as a premier customer, such
          Services set forth in Section 19.3(d), with respect to IBM response to
          a force majeure occurrence.

11.  AUDITS

11.1 Audit Rights.

     (a)  IBM shall maintain records and supporting documentation of all
          financial and nonfinancial transactions resulting from this Agreement,
          sufficient to permit a complete audit thereof in accordance with this
          Section. Empire, and its auditors (including internal audit staff and
          external auditors), inspectors, regulators and other representatives
          as Empire may from time to time designate in writing (collectively
          "Empire Auditors") shall have the right to perform three (3) annual
          audits at no additional charge to Empire, which may consist, at
          Empire's option, of financial audits, security audits and/or
          operations audits, provided that Empire shall be entitled to
          additional audits (including as needed to meet Empire regulatory
          requirements or Empire contractual requirements) so long as Empire
          pays certain IBM costs relating to such audits, as described in
          Section 11.3. IBM shall provide to Empire Auditors access at all
          reasonable times and after reasonable notice, unless circumstances
          reasonably preclude such notice (and in the case of regulators at any
          time required by such regulators): (x) to any facility or part of a

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          facility at which either IBM or any of its subcontractors is providing
          the Services, (y) to IBM Personnel, and (z) to data and records
          relating to the Services, for the purpose of performing audits and
          inspections of either IBM or any of its subcontractors during the Term
          and for the period IBM is required to maintain records hereunder to:

          (i)  verify the accuracy of charges, invoices, and IBM's
               representation regarding the personnel rates set forth in Section
               3.1(c) of Schedule C;

          (ii) verify the integrity of Empire Data and examine the systems that
               process, store, support and transmit that data; and

          (iii) examine IBM's performance of the Services and conformance to the
               terms of this Agreement including, to the extent applicable to
               the Services and to the charges therefor, performing audits: (A)
               of practices and procedures; (B) of systems, Equipment and
               Software; (C) of supporting information and calculations
               regarding compliance with Performance Standards; (D) of general
               controls and security practices and procedures; (E) of disaster
               recovery and back-up procedures; (F) of the efficiency of IBM in
               performing the Services; (G) of IBM's charges for, or timing of,
               Services; (H) of the basis of IBM's Services charges; and (I) as
               necessary to enable Empire to meet, or to confirm that IBM is
               meeting, applicable regulatory and other legal requirements.

     (b)  Empire may require to be performed, no more than once annually, a SAS
          70 audit of the data center from which IBM provides Data Center
          Services, by a certified public accounting firm or mutually agreeable
          alternative. In the event that Empire is the primary customer within
          such data center, then Empire shall be financially responsible for the
          costs for such SAS 70 audit; in any other event, IBM shall be
          financially responsible for the costs for such SAS 70 audit.

     (c)  Notwithstanding the foregoing, if Empire has a reasonable belief to
          suspect any malfeasance or dishonest acts in relation to the Services,
          and to the extent that notice would undermine the efficacy of the
          audit, Empire Auditors shall be entitled to undertake such audit of
          IBM in relation to the Services as Empire reasonably deems appropriate
          without the foregoing notice. If any audit reveals that material
          operational problems or material financial issues exist, subject to
          IBM's right to dispute such determination, IBM shall reimburse Empire
          for any reasonable and actual costs directly incurred in such audit,
          if the issues revealed exceed $100,000 of actual overpayments for a
          review period covering up to one year of charges. In such event,
          Empire Auditors may conduct a follow-up audit when reasonably deemed
          appropriate by Empire, at no additional charge. IBM shall, subject to
          IBM's right to dispute such determination, respond promptly to any
          conclusions and recommendations reported as part of an audit, and the
          Parties will establish and monitor IBM's schedule for implementation
          of such recommendations.

     (d)  IBM shall provide to Empire Auditors such assistance as they require,
          including installing and operating audit software. IBM shall cooperate
          fully with Empire Auditors in connection with audit functions and with
          regard to examinations by regulatory authorities. IBM shall promptly
          notify Empire once it determines that such cooperation may cause a
          problem or delay in providing the Services, and the Parties shall work

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          together to avoid interference with IBM's ability to provide the
          Services. Empire Auditors (i) shall comply with IBM's reasonable
          security and confidentiality requirements; and (ii) if Empire external
          auditors, shall not, in IBM's reasonable judgment, be a competitor of
          IBM that provides services similar to the Services. The Parties agree
          that KPMG, Ernst and Young, and any auditor engaged by regulatory
          agencies to perform an audit hereunder shall not be deemed to be
          competitors of IBM for purposes of Section 11.1(d)(ii).

     (e)  IBM shall conduct audits of or pertaining to the Services in such
          manner and at such times as is consistent with the audit practices of
          well managed operations performing services similar to the Services.
          IBM shall perform a security audit at least annually.

11.2 Audit Follow-up.

     (a)  Following an audit or examination, Empire shall conduct, or request
          Empire Auditors to conduct, an exit conference with IBM to obtain
          factual concurrence with issues identified in the review. IBM shall
          promptly brief Empire on the results of any review or audit conducted
          by IBM or its Affiliates (including by internal audit staff or
          external auditors), or by inspectors, regulators or other
          representatives (including internal and external auditors), relating
          to IBM's operating practices and procedures to the extent relevant to
          the Services or Empire.

     (b)  IBM and Empire shall meet to review each audit report promptly after
          the issuance thereof and to mutually agree upon the appropriate
          manner, if any, in which to respond to the changes suggested by the
          audit report. Empire and IBM agree to meet and develop action plans to
          address (i) the audit, and (ii) regulatory findings and reports
          related to IBM's operating practices and procedures related to the
          Services.

11.3 Audit Costs.

     (a)  With regard to audits during a contract year in addition to the three
          (3) audits described in Section 11.1(a) above and as required to meet
          regulatory requirements and Empire contractual requirements, if the
          provision of such cooperation and support by IBM will cause IBM to
          expend additional resources, above the authorized resource levels
          described in Schedule C and that it otherwise would not spend in the
          normal course of providing the Services, IBM will notify Empire of
          such requirement for additional resources. Upon Empire's
          authorization, IBM will provide such assistance, and Empire will be
          charged at the personnel rates set forth in Schedule C, except that
          there shall be no additional charge to Empire for any cooperation and
          assistance provided by the IBM Project Executive or by IBM Personnel
          holding Key IBM Positions.

     (b)  Except as provided in this Section 11.3, there shall be no additional
          charge to Empire for any cooperation and assistance provided by IBM in
          connection with audits conducted pursuant to Article 11.

11.4 Records Retention.

     Until the later of (i) seven (7) years after expiration or termination of
     this Agreement; (ii) all pending matters relating to this Agreement (e.g.,
     disputes) are closed; or (iii) the information is

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     no longer required to meet Empire's records retention policy as disclosed
     by Empire to the IBM Project Executive and as such policy may be adjusted
     from time to time as disclosed by Empire to the IBM Project Executive, IBM
     shall maintain and provide access upon request to the records, documents
     and other information required to meet Empire's audit rights under this
     Agreement. Upon reasonable notice from Empire, IBM will recover such
     information and deliver it to Empire within a reasonable period of time,
     with Empire paying IBM's reasonable expenses.

12.  CUSTOMER RESPONSIBILITIES

12.1 Responsibilities.

     In addition to Empire's responsibilities as expressly set forth elsewhere
     in this Agreement, Empire shall be responsible for the following:

     (a)  Empire shall designate one individual to whom IBM may address
          operational communications concerning this Agreement (the "Empire
          Contract Executive"). Empire may from time to time designate a
          replacement Empire Contract Executive, by giving IBM prior written
          notice of the replacement individual and the date upon which such
          replacement will become effective. Empire acknowledges the benefits of
          consistency with regard to the Empire Contract Executive and therefore
          will use Commercially Reasonable Efforts to minimize the turnover of
          the Empire Contract Executive.

     (b)  Empire shall cooperate with IBM, including by making available
          management decisions, information, approvals and acceptances, as
          reasonably requested by IBM so that IBM may accomplish its obligations
          and responsibilities hereunder. The Empire Contract Executive or such
          person's designee will be the principal point of contact for obtaining
          such decisions, information, approvals and acceptances. Only personnel
          as expressly so designated by the Empire Contract Executive will be
          authorized to make commitments on the part of Empire that will subject
          Empire to increased charges. Only the Empire Contract Executive shall
          be authorized to amend this Agreement, as provided in Section 23.2.

12.2 Savings Clause.

     (a)  Due to the impact any termination of this Agreement would have on
          Empire's business, Empire's failure to perform its responsibilities
          set forth in this Agreement (other than as provided in Section 21.1(c)
          or Section 21.2) shall not be deemed to be grounds for termination by
          IBM. IBM Acknowledges That Empire Would Not be Willing to Enter Into
          This Agreement Without Assurance That It May Not be Terminated by IBM
          and That IBM May Not Suspend Performance Except, and Only to the
          Extent, IBM Terminates Pursuant to Section 21.1 (C) or Section 21.2 or
          IBM Suspends Performance Pursuant to Section 20.3. IBM's
          nonperformance of its obligations under this Agreement shall be
          excused if and to the extent (a) such IBM nonperformance results from
          Empire's failure to perform its responsibilities; and (b) IBM provides
          Empire with reasonable notice of such nonperformance and (if requested
          by Empire) uses Commercially Reasonable Efforts to perform
          notwithstanding Empire's failure to perform (with Empire reimbursing
          IBM for its Out-of-Pocket Expenses for such efforts).

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     (b)  Notwithstanding anything in this Section to the contrary, so long as
          IBM has given Empire notice as hereinafter described and Empire has
          not notified IBM that Empire is willing to pay IBM's expenses as
          hereinafter described, IBM shall have no duty to (i) incur additional
          costs in performing its obligations under the Agreement as a result of
          a failure by Empire to perform any of its responsibilities or
          obligations under the Agreement; or (ii) investigate any failure by
          Empire to perform any of its responsibilities or obligations, unless,
          in either case, IBM has given notice to Empire of Empire's failure and
          the opportunity for Empire to pay IBM's expenses incurred in taking
          action to circumvent or investigate such failure, and Empire agrees in
          advance to pay IBM for such expenses (in which case IBM shall be so
          obligated to perform its obligations, if practicable, or investigate
          the corresponding failure by Empire, as applicable). Nothing in this
          Section 12.2 shall be deemed to require a Party to perform the other
          Party's obligations under the Agreement.

13.  CHARGES

13.1 General.

     All amounts IBM may charge for the Services are set forth in this Article
     13, Sections 3.1(f), 5.4, 8.1(b)(vi), 21.10(b) and in Schedules C and D,
     provided, however, that the foregoing does not relieve Empire of financial
     responsibility where expressly provided in this Agreement. Empire shall not
     be required to pay IBM any amounts for the Services other than those
     payable to IBM under this Article 13, the sections referenced above or
     Schedules C and D.

13.2 Pass-Through Expenses.

     (a)  "Pass-Through Expenses" means third party charges that are to be both
          (i) paid directly by Empire through IBM on an Out-of-Pocket Expenses
          basis and (ii) administered by IBM. As set forth in Schedule C,
          initially there are no Pass-Through Expenses. Any Pass-Through Expense
          must be agreed to by the Parties in writing. If the Parties so agree,
          the provisions in this next section shall apply to such Pass-Through
          Expenses.

     (b)  IBM shall arrange for delivery by third parties to IBM of invoices for
          Pass-Through Expenses, and IBM promptly shall review such invoices and
          provide Empire with the original invoice together with a statement
          identifying which charges are proper and valid and should be paid by
          Empire. IBM shall use Commercially Reasonable Efforts to minimize the
          amount of Pass-Through Expenses. With respect to services or materials
          paid for on a Pass-Through Expenses basis, Empire reserves the right
          to: (i) obtain such services or materials directly from one or more
          third parties; (ii) designate the third party source for such services
          or materials; (iii) designate the particular services or materials
          (e.g., equipment make and model) IBM shall obtain; (iv) designate the
          terms for obtaining such services or materials (e.g., purchase or
          lease and lump sum payment or payment over time); (v) require IBM to
          identify and consider multiple sources for such services or materials
          or to conduct a competitive procurement; and (vi) review and approve
          the applicable Pass-Through Expenses before entering into a contract
          for particular services or materials.

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13.3 Incidental Eimnses.

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

13.4 Taxes.

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

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

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

     (c)  Empire shall be responsible for any sales, use, excise, value-added,
          services, consumption (including Arizona transaction privilege tax,
          Arkansas gross receipts tax, Hawaii general excise tax, Illinois
          retailer's occupation tax, and New Mexico gross receipts tax), or
          other tax existing as of the Effective Date that is assessed on the
          provision of the Services as a whole, or on any particular Service. To
          the best of IBM's knowledge, as of the Effective Date, there is no
          such tax, as set forth in the preceding sentence, applicable in the
          following locations: New York; New Jersey; Pennsylvania; the delivery
          of remote Data Center Services from Connecticut; the delivery of Help
          Desk Services from Toronto; and the delivery of Core Applications
          Services from Bangalore, India. The Parties shall share equally the
          responsibility for any sales, use, excise, value-added, services,
          consumption or other tax becoming applicable during the Term (or that
          is increased during the Term) that is assessed on the provision of the
          Services as a whole, or on any particular Service provided by IBM, or
          on IBM's charges for some or all of the Services. Empire's obligations
          to pay taxes under this Section 13.4 are subject to the following: (i)
          IBM invoices shall reflect on a current basis (and in any event before
          any such tax becomes due and payable) the amount of any such tax in
          each jurisdiction and the taxable Services to which such tax relates,
          and (ii) if IBM fails to reflect on its invoice any such tax on a
          current basis and the cause for such failure lies solely within IBM,
          IBM shall be financially responsible for any penalties and interest
          assessed by the taxing authority with respect to such tax.

     (d)  The Parties acknowledge that any tax payable by Empire and billed
          through IBM shall be paid by Empire on an Out-of-Pocket Expense basis.

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

          (i)  those for taxable Services;

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

          (iii) those for other nontaxable Services.

     (f)  The Parties agree to cooperate with each other to enable each to more
          accurately determine its own tax liability and to minimize such
          liability to the extent legally permissible. The Parties acknowledge
          that, and Empire represents that as of the Effective Date, Empire is
          tax-exempt within the State of New York. Empire will provide, on the
          Effective Date, appropriate tax-exempt certificates to support the
          foregoing representation, upon any such request by IBM. IBM shall
          cooperate with Empire to leverage such tax-exempt status, in order to
          allow Empire to minimize potential tax liability (e.g., through the
          procurement of Equipment and Software). IBM's invoices shall
          separately state the amounts of any taxes IBM is collecting from
          Empire, and IBM shall remit such taxes to the appropriate authorities,
          if any. Each Party shall provide and make available to the other any
          resale certificates, information regarding out-of-state or
          out-of-country sales or use of equipment, materials or services, and
          other exemption certificates or information reasonably requested by
          the other Party.

     (g)  IBM shall promptly notify Empire of any claim for taxes assessed by
          applicable taxing authorities for which Empire is responsible
          hereunder.

          (i)  If IBM decides not to challenge the assessment, Empire may itself
               pursue such challenge.

          (ii) If such challenge may not be brought by Empire directly under
               applicable law, Empire may request that IBM itself challenge the
               assessment, and IBM shall do so in a timely manner. IBM will
               cooperate and coordinate on the tax strategy and consequences
               with the tax advisors of Empire's choosing in such challenge.
               Empire shall be responsible for paying its tax advisors, and
               Empire shall reimburse IBM for the reasonable legal fees and
               Out-of-Pocket Expenses paid to third parties by IBM and incurred
               in connection with such challenge. If such challenge is rejected
               by applicable taxing authorities, Empire agrees to pay applicable
               assessed taxes.

          (iii) Empire shall be entitled to any tax refunds or rebates granted
               to the extent such refunds or rebates are of taxes that were paid
               by Empire.

     (h)  In connection with any administrative or judicial proceedings relating
          to taxes assessed or to be assessed on either Party relating to this
          Agreement, each of the Parties shall make available to each other, as
          reasonably requested and available, personnel (including officers,
          directors, employees and agents of the Parties or

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          their respective Affiliates) responsible for preparing, maintaining
          and interpreting information and documents relevant to such taxes, and
          personnel reasonably required as witnesses or for purposes of
          providing information or documents in connection with such
          proceedings. Any such information or documents provided under this
          Section 13.4(h) shall be kept confidential by the Party receiving the
          information or documents in accordance with Section 15.3, provided
          that disclosure in connection with the filing of tax returns or with
          any such administrative or judicial proceeding shall not be deemed to
          be a violation of this Agreement.

13.5 Extraordinary Events.

     (a)  As used in this Agreement, an "Extraordinary Event" means a
          circumstance in which (i) Empire's total Lives are reduced by more
          than 500,000 Lives, in total, during any four (4) consecutive calendar
          quarters, or (ii) with respect to any chargeable resource under this
          Agreement (including Core Applications personnel), a circumstance in
          which Empire's actual usage of such resource increases or decreases,
          or is expected to increase or decrease, for the foreseeable future by
          more than plus or minus twenty percent (20%); provided however, that
          calculation of an Extraordinary Event shall not include any decreases
          in Lives or resource usage due to Empire's performing itself, or
          retaining third parties to perform, any of the Services, as provided
          in Section 3.1(e); provided additionally, that in the event that
          Empire outsources to a third party any part of its business that is
          not in-scope Services, and such action results in a reduction in
          Empire's need for Services, then such resulting reduction in Services
          may be included in calculation of an Extraordinary Event.

     (b)  If Empire notifies IBM in writing of the occurrence of an
          Extraordinary Event which references this Section 13.5, IBM's charges
          and resources (including base charges and rates as appropriate) with
          respect to the Services shall be adjusted in accordance with this
          Section 13.5(b). IBM's adjustment in resources shall be in accordance
          with a plan prepared by IBM and approved by Empire or, (1) if IBM
          fails to prepare and present such a plan to Empire, as reasonably
          requested by Empire, or (2) if the Parties are unable to agree on such
          a plan, as determined through the dispute resolution process provided
          in Article 20.

          (i)  As used in this Agreement: "Targeted Resource Reductions" shall
               mean those resources no longer required by IBM to provide the
               Services. "Targeted Cost Reductions" shall mean the costs
               (including appropriate indirect and overhead costs) and related
               profit that can be eliminated or reduced as and when the Targeted
               Resource Reductions are eliminated. "Targeted Resource Additions"
               shall mean those new or modified resources newly required by IBM
               to provide the Services. "Targeted Cost Increases" shall mean the
               costs (including appropriate indirect and overhead costs) and a
               reasonable profit (which profit shall be consistent with the
               gross profit margins for similar Services under this Agreement,
               including Schedule C) that would be incurred as and when the
               Targeted Resource Additions are placed in service.

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          (ii) IBM shall proceed to eliminate the Targeted Resource Reductions
               as quickly as feasible, but in no more than six (6) months. As
               the Targeted Resource Reductions are eliminated, the base charges
               shall be reduced (subject to Empire payment of Wind Down Costs)
               by the full amount of the Targeted Cost Reductions applicable to
               Targeted Resource Reductions, and any affected baselines,
               Services descriptions and Service Level agreements shall be
               equitably adjusted, as appropriate. IBM shall proceed to deploy
               the Targeted Resource Additions as necessary, but in no more than
               six (6) months. As the Targeted Resource Additions are placed
               into service, the base charges will be increased by the full
               amount of the Targeted Cost Increases applicable to such Targeted
               Resource Additions, and any affected baselines, Services
               descriptions and Service Level agreements shall be equitably
               adjusted, as appropriate. As such baseline and charges
               adjustments as set forth in this Section 13.5(b)(ii) are made,
               the increase/decrease methodology ratios set forth in Exhibit 4
               to Schedule C shall also be equitably adjusted as appropriate to
               reflect the changed circumstances.

          (iii) The Parties initially shall attempt on a reasonable basis to
               agree upon (A) the occurrence of an Extraordinary Event; (B)
               Targeted Resource Reductions; (C) Targeted Cost Reductions; (D)
               Targeted Resource Additions; (E) Targeted Cost Increases; and (F)
               the appropriate adjustment to charges and the timing thereof. To
               the extent that, within sixty (60) days following notice under
               this Section 13.5, the Parties have not agreed upon the
               foregoing, then at the initiative of either Party the issue shall
               be treated as a dispute under Article 20. Decisions under the
               dispute resolution process shall be effective from sixty (60)
               days following notice under this Section 13.5.

13.6 New Services.

     In the event that Empire requests IBM to perform functions that are
     materially different from, and in addition to, the Services ("New
     Services"), the Parties' obligations with respect to such functions shall
     be as follows:

     (a)  To the extent that such additional functions require resources for
          which a pricing metric or charging methodology exists under the
          Agreement, the additional functions shall be priced in accordance with
          such pricing metric or charging methodology, Empire will pay the
          charges for such additional functions through such pricing metric or
          charging methodology, and such additional functions shall be
          considered "Services" (and not "New Services") and shall be subject to
          the provisions of the Agreement.

     (b)  To the extent that such additional functions require resources for
          which a pricing metric or charging methodology does not exist under
          the Agreement, and IBM agrees to provide such additional functions,
          then prior to performing such additional functions:

          (i)  IBM shall quote to Empire a charge for such additional functions.
               Such quote shall be reduced, as applicable, to take into account
               resources and expenses of IBM for then-existing Services that
               would no longer be required if the additional functions would be
               performed by IBM.

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          (ii) Upon receipt of such quote, Empire may then elect to have IBM
               perform the additional functions, and the charges under this
               Agreement shall be adjusted, if appropriate, to reflect such
               functions. If Empire so elects (as set forth in the preceding
               sentence), such services shall then be deemed "Services" and
               shall be subject to the provisions of this Agreement.

     (c)  Empire may elect in its discretion (i) to solicit and receive bids
          from, or otherwise enter into agreements with, third parties to
          perform New Services, or (ii) to perform itself New Services. If
          Empire so elects, IBM shall cooperate with Empire and the third
          parties with respect to the provision of such services.

     (d)  Evolution, supplements, modifications, enhancements and replacements
          of the Services over time to keep pace with technological advancements
          and improvements in the methods of delivering services shall not be
          deemed to be functions materially different from and in addition to
          the Services, except to the extent that such evolution, supplements,
          modifications, or enhancements cause a material change in the cost of
          Services delivery and/or scope of Services.

     (e)  The Parties agree that in the event that Empire acquires or merges
          with another entity, Empire may, in order to meet the information
          technology requirements of such other entity, at its option: (i)
          engage a third party to provide services similar to the Services to
          such other entity, or (ii) direct IBM to provide Services to such
          entity.

13.7 Benchmarks.

     Empire shall have the right during the Term, beginning (subject to Section
     3.3(e) of Schedule C) upon the second anniversary of the Effective Date, to
     benchmark the cost and charges for, and IBM's performance of, all or a
     portion of the Services (including personnel rates), provided that
     benchmarking of particular charges cannot be undertaken more than one time
     in any rolling two (2) year period.

     (a)  A benchmarking under this Section shall be conducted by an
          independent, third party, industry-recognized benchmarking service
          provider designated by Empire and approved by IBM ("Benchmarker"). The
          Parties agree that Gartner Group, Compass Group, and Meta are
          acceptable to serve as a Benchmarker as of the Effective Date. The
          Parties shall cooperate with the Benchmarker, including, as
          appropriate, making available knowledgeable personnel and pertinent
          documents and records. The Benchmarker shall execute a confidentiality
          agreement that contains confidentiality terms and conditions
          substantially similar to those set forth in Section 15.3 of this
          Agreement, unless there already exists a confidentiality agreement
          with the Benchmarker.

     (b)  The Benchmarker shall perform the benchmarking in accordance with the
          Benchmarker's documented procedures which shall be provided to the
          Parties prior to the start of the benchmarking process and to which
          the Parties may comment prior to the benchmarking. The Benchmarker
          shall compare the costs, charges and/or performance of the Services
          under this Agreement, as appropriate, for the Services being
          benchmarked to the costs, charges, and/or performance in a
          representative sample of well-managed IT operations performing
          services similar to the Services. The Benchmarker shall select the
          representative sample from entities (i) identified by the

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          Benchmarker, and (ii) identified by a Party and approved by the
          Benchmarker. The following conditions apply to the representative
          sample: (A) it shall include at least six (6) entities and no more
          than eighteen (18) entities, (B) it may include entities that have not
          outsourced IT operations, and (C) it may include entities that are
          outsourcing customers of IBM.

     (c)  The Benchmarker is to conduct a benchmarking as promptly as is prudent
          in the circumstances. In conducting the benchmarking, the Benchmarker
          shall normalize the data used to perform the benchmarking to
          accommodate, as appropriate, differences in volume of services, scope
          of services, service levels, financing or payment streams, and other
          pertinent factors. The transactions contemplated by the Claims Engine
          License Agreement and the Licensing and Joint Development Agreement,
          and the credits associated with such agreements, shall not be included
          as part of the Benchmarker's analysis. Each Party shall be provided a
          reasonable opportunity to review, comment on and request changes in
          the Benchmarker's proposed findings. Following such review and
          comment, the Benchmarker shall issue a final report of its findings
          and conclusions.

     (d)  If in the final report of the Benchmarker, the costs, charges, and/or
          performance to Empire under this Agreement for the benchmarked
          Services are not in the top ten percent (10%) of the representative
          sample (viewed from the perspective of Empire) (e.g., lower than
          ninety percent (90%) of the representative sample) ("Top Ten
          Percent"), then the following shall apply:

          (i)  After collaboration with and discussion between the Parties with
               respect to the Benchmarker's final report (which the Parties
               shall examine reasonably and in good faith), IBM shall give
               Empire written notification within thirty (30) days after
               issuance of the Benchmarker's final report whether IBM accepts
               such final report. If IBM accepts such report, IBM promptly shall
               develop a plan and schedule, subject to the approval of Empire,
               to bring IBM within the Top Ten Percent (or such other percentage
               as agreed by the Parties) in a reasonable period of time, but in
               any event no longer than within six (6) months (unless otherwise
               agreed by the Parties). IBM then shall implement the plan.

          (ii) If (A) IBM does not provide notice that IBM accepts the
               Benchmarker's final report within thirty (30) days, as provided
               above, or (B) the Parties are unable to agree on an appropriate
               plan and schedule to respond to the Benchmarker's final report,
               as provided above, then the Parties will attempt to resolve the
               dispute in accordance with Section 20.1. In the event (I) the
               dispute is not so resolved, or (II) absent a dispute regarding
               the Benchmarker's final report, IBM fails to bring IBM within the
               Top Ten Percent (or such other percentage as agreed by the
               Parties) in a reasonable period of time, but in any event no
               longer than within six (6) months (unless otherwise agreed by the
               Parties), then Empire may terminate the benchmarked Services or
               any portion thereof, subject only to Empire payment of Wind Down
               Costs, by giving IBM at least sixty (60) days' prior notice. In
               the case of termination by Empire of Services in accordance with
               this Section 13.7(d)(ii): (1) the charges payable under this
               Agreement for continuing Services shall be equitably adjusted to
               reflect the Services that are terminated, and (2) if Empire
               terminates a portion of a Tower, then to the extent IBM
               reasonably determines that the Services terminated by Empire
               under this

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               provision are integral to the entire Tower in which such Services
               are included, IBM shall give notice to Empire of such fact, and
               Empire shall have the option: (y) to terminate the entire Tower,
               or (z) not to terminate the Services that IBM has identified as
               integral to such Tower.

     (e)  If in the final report of the Benchmarker, the charges to Empire under
          this Agreement for the benchmarked Services are in the Top Ten Percent
          of the representative sample (viewed from the perspective of most
          beneficial to Empire), then no adjustment shall be made. In no event
          shall charges be increased as a result thereof.

     (f)  The Benchmarker shall be retained by Empire. Each Party shall pay the
          Benchmarker one half (1/2) of all charges, expenses and costs incurred
          by the Benchmarker in performing the benchmarking described in this
          Section 13.7 as such charges, expenses and costs are invoiced.

13.8 [**] Within thirty (30) days after the Effective Date and each anniversary
     of the Effective Date during the Term thereafter, IBM's Project Executive
     shall certify in writing to Empire that IBM is in compliance with this
     Section 13.8, and shall provide the information reasonably requested by
     Empire to verify such compliance. Any adjustment under this Section 13.8
     shall be retroactive to the prior annual certification.

14.  INVOICING AND PAYMENT

14.1 Invoicing.

     (a)  General. All fixed charges shall be billed for receipt by Empire on
          the first (1st) day of the month for which such charges relate, and
          all variable charges and credits shall be billed or credited, as the
          case may be, in arrears in the following month's invoice. Each invoice
          shall, for each charge broken out on the invoice, cite the specific
          section(s) of the Agreement on which such charge is based. IBM shall
          include the calculations utilized to establish the charges. All
          charges shall be stated in United States Dollars. Each invoice shall
          separately state the amounts of any taxes IBM is collecting from
          Empire, if any, and IBM shall remit such taxes to the appropriate
          authorities.

     (b)  Credits Due Empire.

          (i)  To the extent a credit may be due Empire pursuant to this
               Agreement (including refunds and Service Level Credits, but not
               including those items in Section 14.1(b)(ii) below), IBM shall
               provide Empire with an appropriate credit against amounts then
               due and owing; if no further payments are due to IBM, IBM shall
               pay such credits to Empire within thirty (30) days of the end of
               the calendar month in which such credits are determined or are
               determinable. Subject to the previous sentence, to the extent any
               credits due Empire under this Section 14.1(b)(i) exceed the
               amount due IBM from Empire, IBM shall provide such to Empire
               within thirty (30) days of the end of the calendar month in which
               such credits are determined or are determinable.

          (ii) Application of Revenue Sharing Credits owed by IBM to Empire
               under the Claims Engine License Agreement and the Licensing and
               Joint Development Agreement shall be governed by Section 9.1 (c)
               of Schedule C and the applicable provisions of the Claims Engine
               License Agreement and the Licensing and Joint Development
               Agreement.

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     (c)  Form of Invoice. IBM shall render a single consolidated invoice for
          each month's charges showing such details as reasonably specified by
          Empire. Related fees and charges shall be grouped together in a
          logical manner to facilitate review and verification by Empire.
          Invoices will be in a format and at a level of detail and with
          appropriate back-up documentation approved by Empire. The form of
          invoice shall be as approved by Empire.

     (d)  Timely Invoices.

          (i)  In no event shall IBM invoice Empire for any Services more than
               180 days after the date such Services were performed, provided,
               however, that to the extent Empire is precluded from recouping,
               despite Empire's Commercially Reasonable Efforts to so recoup,
               any charges invoiced to Empire by IBM under Empire's cost-plus
               financial agreements with Empire's customers, Empire shall not be
               responsible for such IBM charges if invoiced to Empire more than
               sixty (60) days after the date such Services were performed.

          (ii) To the extent that IBM has administrative responsibility for an
               Asset, as set forth in Article 6 or 7, if (A) IBM fails to timely
               notify Empire of an invoice or bill with respect to such Asset,
               or (B) IBM fails to timely forward payment with respect to such
               invoice or bill, then IBM shall be financially responsible for
               the full amount of any resulting penalties, interest and/or late
               charges.

14.2 Payment Due.

     (a)  Subject to the other provisions of this Article 14, invoices provided
          for under Section 14.1 and properly submitted to Empire pursuant to
          this Agreement shall be due and payable by Empire:

          (i)  with respect to fixed charges, by the end of the calendar month
               in which Empire receives such invoice from IBM, if Empire
               receives such invoice and the applicable and adequate supporting
               documentation by the applicable date set forth in Section 14.1(a)
               above, or

          (ii) if Empire receives an invoice for fixed charges and the
               applicable and adequate supporting documentation after the
               applicable date set forth in Section 14.1(a), and with respect to
               variable charges invoiced in accordance with Section 14.1(a),
               within thirty (30) days after receipt of such invoice by Empire.

          Any amount due under this Agreement for which a time for payment is
          not otherwise specified shall be due and payable within thirty (30)
          days after receipt of a proper invoice for such amount.

     (b)  In the event that any undisputed payment, excluding any payment
          withheld or paid into escrow pursuant to Section 14.7, is not received
          by IBM within five (5) days after Empire's receipt of written notice
          from IBM indicating that such payment is due and owing and unpaid,
          then Empire will pay interest on such due and unpaid amount commencing
          at the end of such five (5) day period and ending on the date that
          payment

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          is made, at an interest rate equal to the lesser of (i) twelve percent
          (12%) per year; or (ii) the maximum amount permissible by law.

14.3 Accountability.

     IBM shall maintain complete and accurate records of and supporting
     documentation for the amounts billable to and payments made by Empire
     hereunder, to the extent required to comply with Article 11 and in
     accordance with generally accepted accounting principles applied on a
     consistent basis. IBM agrees to provide Empire with documentation and other
     information with respect to each invoice as may be reasonably requested by
     Empire to verify accuracy and compliance with the provisions of this
     Agreement.

14.4 Proration.

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

14.5 Refundable Items.

     (a)  Prepaid Amounts. Where Empire has prepaid for a service or function
          for which IBM is assuming, or shall become obligated to assume,
          financial responsibility under this Agreement, IBM shall refund to
          Empire, upon either Party identifying the prepayment, that portion of
          such prepaid expense which is attributable to periods, on and after
          the Effective Date, during which IBM is obligated to pay for such
          service or function.

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

14.6 Set Off.

     At its option and in good faith, Empire may set off, as a credit against
     the monthly charges payable to IBM under this Agreement, any amounts to be
     paid, reimbursed, or otherwise owed or owing to Empire by IBM under this
     Agreement, the Claims Engine License Agreement, the Licensing and Joint
     Development Agreement, the Staten Island Data Center Sublease Agreement,
     and such other agreements as the Parties may mutually agree, provided that
     with respect to fees or services already paid by Empire that Empire later
     disputes, Empire must set off such amounts within ninety (90) days after
     payment of such disputed fees or services. Notwithstanding the ninety (90)
     day limitation above, Empire may set off (pursuant to this Section 14.6)
     any amounts owing to Empire, as identified in audits performed pursuant to
     this Agreement.

14.7 Disputed Charges.

     (a)  Subject to Section 14.6, Empire shall pay charges when such payments
          are due under this Article 14 and Schedule C. Notwithstanding the
          previous sentence, Empire may withhold payment of particular charges
          that Empire disputes in good faith, subject to Section 14.7(b). In the
          event that charges cover both disputed and undisputed items, Empire
          shall pay all undisputed items in accordance with this Article 14 and
          Schedule C.

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     (b)  With respect to particular charges that Empire disputes in good faith,
          the provisions of this Section 14.7(b) shall apply. Subject to the
          remainder of this Section 14.7(b), (i) if Empire has already paid any
          disputed charge, Empire may set-off the disputed charge against other
          charges owed by Empire hereunder, subject to Section 14.6; and (ii) if
          Empire has not paid any disputed charge, Empire may withhold payment
          of such charge. Empire shall notify IBM in writing on or before the
          date that any amount is so withheld (whether in respect of dispute on
          a current invoice or as a set off) and describe, in reasonable detail,
          the reason for such withholding.

     (c)  Empire and IBM shall diligently pursue an expedited resolution of such
          dispute. If the aggregate amount of all charges then under dispute
          pursuant to this Section 14.7 exceeds one month of monthly charges
          under this Agreement (the "Escrow Threshold"), then for any amounts in
          dispute in excess of the Escrow Threshold, Empire shall deposit such
          amount into an escrow account. Empire shall promptly furnish evidence
          of any escrow deposit to IBM. The Parties agree that such escrow
          account shall be mutually established by the Parties at the Bank of
          New York, or its successor, or such other bank as may be mutually
          agreed by the Parties, and the costs of such escrow shall be borne by
          the Party which is not ultimately entitled to receive over fifty
          percent (50%) of the escrowed funds (with the Parties splitting the
          costs of escrow evenly, should they both be entitled to fifty percent
          (50%) of the escrowed funds). The escrow account will be mutually
          established pursuant to an escrow agreement that provides that the
          funds therein, including accrued interest, will be disbursed to IBM or
          Empire or both, as applicable, in accordance with the result of the
          dispute resolution process referred to in Article 20 or by mutual
          agreement of the Parties.

     (d)  For as long as Empire (i) makes such escrow deposits in accordance
          with this Section 14.7 during the pendency of the dispute, and (ii)
          pays undisputed amounts, then IBM shall continue to provide the
          Services to Empire, provided, however, that if the aggregate amount of
          charges then under dispute pursuant to this Section 14.7 and paid into
          escrow exceeds three (3) months of additional monthly charges under
          this Agreement (i.e., three (3) months of charges in addition to the
          one (1) month of charges below the Escrow Threshold) (the "Escrow
          Cap"), then for any amounts in dispute in excess of the Escrow Cap,
          Empire shall pay such additional disputed charges to IBM under
          protest, without prejudice, and without waiving its rights under this
          Agreement.

15.  SAFEGUARDING OF DATA; CONFIDENTIALITY

15.1 Empire Information.

     (a)  Empire Information shall be and remain, as between the Parties, the
          property of Empire. IBM shall not possess or assert any lien or other
          right against or to Empire Information. No Empire Information, or any
          part thereof, shall be sold, assigned, leased or otherwise disposed of
          to third parties by IBM or commercially exploited by or on behalf of
          IBM.

     (b)  Upon Empire's request, the termination or expiration of this Agreement
          for any reason (including termination for cause) or, with respect to
          any particular Empire Information, on such earlier date that the same
          shall be no longer required by IBM in order to render the Services
          hereunder, Empire Information (including copies thereof) (i) shall be
          promptly returned to Empire by IBM in a form reasonably requested by
          Empire,

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          provided that Empire has given prior approval to any reasonable costs
          associated with the conversion of Empire Information from the form
          maintained by IBM, or (ii) if Empire so elects, shall be destroyed by
          IBM.

     (c)  Subject to Section 7.6 (Residual Knowledge), Empire Information shall
          not be utilized by IBM for any purpose other than that of rendering
          the Services under this Agreement.

15.2 Safeguarding Empire Data.

     (a)  IBM shall establish and maintain safeguards against the destruction,
          loss or alteration of Empire Data in the possession or control of IBM
          which are no less rigorous than those maintained by Empire as of the
          Effective Date, as specified to the IBM Project Executive, and are no
          less rigorous than those maintained by IBM for its own information of
          a similar nature, but in no event shall IBM use less than Commercially
          Reasonable Efforts to safeguard such Empire Data. Empire shall have
          the right to establish backup security for Empire Data and to keep
          backup Empire Data and Empire Data files in its possession if it
          chooses.

     (b)  Without limiting the generality of Section 15.2(a):

          (i)  IBM Personnel shall not attempt to access, or grant access to,
               any Empire Data which they are not permitted to access under this
               Agreement. If such access is attained (or is reasonably
               suspected), IBM shall immediately report such incident to Empire,
               describe in detail the accessed Empire Data, and if applicable
               return to Empire any copied or removed Empire Data.

          (ii) IBM shall utilize Commercially Reasonable Efforts, including
               through systems security measures, to guard against the
               unauthorized access, alteration or destruction of Software and
               Empire Data. Unless otherwise specified in the Procedures Manual
               on a case-by-case basis or as requested by Empire, such measures
               shall include the installation of Software which: (A) requires
               all users to enter a user identification and password prior to
               gaining access to the information systems; (B) controls and
               tracks the addition and deletion of users; and (C) controls and
               tracks user access to areas and features of the information
               systems.

     (c)  Upon Empire's request, the termination or expiration of this Agreement
          for any reason (including termination for cause) or, with respect to
          any particular Empire Data, on such earlier date that the same shall
          be no longer required by IBM in order to render the Services
          hereunder, Empire Data (including copies thereof) (i) shall be
          promptly returned to Empire by IBM in a form usable by Empire, as
          reasonably requested by Empire, provided that Empire has given prior
          approval to any reasonable costs associated with the conversion of
          Empire Information from the form maintained by IBM, or (ii) if Empire
          so elects, shall be destroyed by IBM.

15.3 Confidentiality.

     (a)  Confidential Information. IBM and Empire each acknowledge that they
          may be furnished with, receive or otherwise have access to information
          of or concerning the

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          other-Party which such Party considers to be confidential. As used in
          this Agreement, "Confidential Information" means all information, in
          any form, furnished or made available directly or indirectly by one
          Party, or to which either Party gains access in the course of or
          incidental to the performance of this Agreement, and that should
          reasonably have been understood by the recipient (because of legends
          or other markings, the circumstances of disclosure, or the nature of
          the information itself) to be confidential to the disclosing Party, an
          Affiliate of the disclosing Party, or a third party. The terms and
          conditions of this Agreement shall be deemed Confidential Information.
          Confidential Information also shall include, whether or not designated
          "Confidential Information," (i) Empire Data; (ii) the specifications,
          designs, documents, correspondence, software, documentation, data and
          other materials and work products produced by or for either Party
          under this Agreement; (iii) all information concerning the operations,
          affairs and businesses of the other Party, the financial affairs of
          the other Party, and the relations of the other Party with its
          customers, employees, providers, subscribers, business partners,
          vendors, consultants, brokers and service providers (including
          customer lists, customer information, account information and consumer
          markets); (iv) Software provided to a Party by or through the other
          Party; (v) Protected Health Information; and (vi) other information or
          data stored on magnetic media or otherwise or communicated orally, and
          obtained, received, transmitted, processed, stored, archived or
          maintained by either Party under this Agreement.

     (b)  Obligations. Subject to Section 15.4:

          (i)  Empire and IBM shall each use at least the same degree of care as
               it employs to avoid unauthorized disclosure of its own
               information, but in any event no less than Commercially
               Reasonable Efforts, to prevent disclosing to unauthorized parties
               the Confidential Information of the other Party, provided that
               IBM may disclose such information (except for the terms and
               conditions of this Agreement) to properly authorized
               subcontractors as and to the extent necessary for performance of
               the Services, and Empire may disclose such information (except
               for the terms and conditions of this Agreement) to third parties
               as and to the extent necessary for the conduct of its business,
               where in each such case, the receiving entity first agrees in
               writing to the obligations described in this Section 15.3. Any
               disclosure to such entities shall be under terms and conditions
               contained in a written agreement containing substantially the
               same terms and conditions as those provided herein.

          (ii) As requested by Empire during the Term, upon expiration or any
               termination of this Agreement, or completion of IBM's obligations
               under this Agreement, IBM shall return or destroy, as Empire may
               direct, all material in any medium that contains, refers to,
               relates to, or is derived from Confidential Information of
               Empire, and retain no copies.

          (iii) Each Party shall use Commercially Reasonable Efforts so that its
               Personnel comply with these confidentiality provisions, and each
               Party shall cause each of its Personnel to annually certify that
               he/she is complying with terms and conditions substantially the
               same as those provided herein.

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          (iv) In the event of any actual or suspected misuse, disclosure or
               loss of, or inability to account for, any Confidential
               Information of the furnishing Party, the receiving Party promptly
               shall (A) notify the furnishing Party upon becoming aware
               thereof; (B) promptly furnish to the other Party full details of
               the unauthorized possession, use, or knowledge, or attempt
               thereof, and use reasonable efforts to assist the other Party in
               investigating or preventing the reoccurrence of any unauthorized
               possession, use, or knowledge, or attempt thereof, of
               Confidential Information; (C) take such actions as may be
               necessary or reasonably requested by the furnishing Party to
               minimize the violation; and (D) cooperate in all reasonable
               respects with the furnishing Party to minimize the violation and
               any damage resulting therefrom.

          (v)  The Parties' obligations respecting Confidential Information
               shall survive expiration or termination of this Agreement for a
               period of six (6) years, except: (A) for medical, provider,
               subscriber and customer information, which shall survive
               indefinitely, and (B) as otherwise provided by law.

     (c)  Exclusions. The following is subject to Section 15.4:

          (i)  Section 15.3(b) shall not apply to any particular information
               which IBM or Empire can demonstrate: (A) was, at the time of
               disclosure to it, in the public domain; (B) after disclosure to
               it, is published or otherwise becomes part of the public domain
               through no fault of the receiving Party; (C) was in the
               possession of the receiving Party at the time of disclosure to it
               without obligation of confidentiality; (D) was received after
               disclosure to it from a third party who had a lawful right to
               disclose such information to it without any obligation to
               restrict its further use or disclosure; or (E) was independently
               developed by the receiving Party without reference to
               Confidential Information (including unaided mental impressions)
               of the furnishing Party. In addition, a Party shall not be
               considered to have breached its obligations by disclosing
               Confidential Information of the other Party (I) as required by
               law, except with respect to those laws and regulations described
               in item (II), to satisfy any legal requirement of a competent
               government body; provided that, immediately upon receiving any
               such request and to the extent that it may legally do so, such
               Party advises the other Party of the request prior to making such
               disclosure in order that the other Party may interpose an
               objection to such disclosure, take action to assure confidential
               handling of the Confidential Information, or take such other
               action as it deems appropriate to protect the Confidential
               Information; or (II) as required pursuant to any listing
               agreement with or rules of any national securities exchange or
               interdealer quotation system or federal or state securities laws
               or insurance or health regulatory regulations; provided that the
               Parties shall cooperate to minimize disclosure (e.g., redaction)
               consistent with such agreements, rules, laws, and regulations,
               including that the disclosing Party shall notify the other Party
               before such disclosure.

          (ii) Further, a Party shall not be considered to have breached its
               obligations under this Section 15.3 for disclosing Confidential
               Information to its attorneys, auditors and other professional
               advisors in connection with services rendered by such advisors,
               provided that such Party has confidentiality agreements with such

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               professional advisors and/or such advisors owe professional
               confidentiality obligations to such Party.

     (d)  No Implied Rights. Each Party's Confidential Information shall remain
          the property of that Party. Nothing contained in this Section 15.3
          shall be construed as obligating a Party to disclose its Confidential
          Information to the other Party, or as granting to or conferring on a
          Party, expressly or impliedly, any rights or license to the
          Confidential Information of the other Party, and any such obligation
          or grant shall only be as provided by other provisions of this
          Agreement.

15.4 HIPAA Privacy and Security Requirements.

     (a)  Definitions.

          (i)  The "Privacy Rule" shall mean the HIPAA regulations governing
               individually identifiable health information codified at 45
               C.F.R. Parts 160 and 164.

          (ii) "Protected Health Information" or "PHI" shall have the meaning
               given to such term under the Privacy Rule, including 45 C.F.R.
               (S) 160.103, created or received by IBM under the terms of this
               Agreement.

          (iii) "Covered Entity" shall have the meaning given to such term under
               the Privacy Rule, including 45 C.F.R. (S) 160.103.

          (iv) "Business Associate" shall have the meaning given to such term
               under the Privacy Rule, including 45 C.F.R. (S) 160.103.

     (b)  Obligations of IBM under the Privacy Rule. In order to receive the
          Services, Empire may be required to disclose certain PHI to IBM, and
          IBM may receive such PHI or create PHI on Empire's behalf in
          connection with its obligations under this Agreement. Empire and IBM
          shall protect the privacy and provide for the security of PHI
          disclosed to IBM pursuant to this Agreement in compliance with the
          Privacy Rule. IBM may use and disclose PHI created or received
          pursuant to this Agreement only as follows:

          (i)  To Carry Out the Purposes of this Agreement. IBM may use and
               disclose PHI received from Empire or created on behalf of Empire
               to perform its obligations under this Agreement solely in
               accordance with the specifications set forth in this Agreement or
               as required by law.

          (ii) Nondisclosure. IBM shall not use or further disclose the PHI
               received from or created on behalf of Empire in a manner that
               would violate the requirements of the Privacy Rule (including the
               minimum necessary requirements), if done by Empire or any covered
               entity that Empire serves in the capacity of a business
               associate.

          (iii) Safeguards. IBM shall use appropriate safeguards to prevent use
               or disclosure of the PHI other than as provided for under this
               Agreement, including adopting policies and procedures regarding
               the safeguarding of PHI; providing training to relevant
               employees, independent contractors and subcontractors on such
               policies

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               and procedures to prevent the improper use or disclosure of PHI;
               and implementing appropriate technical safeguards to protect PHI.

          (iv) Reporting Improper Disclosures. IBM shall report in writing to
               Empire any use or disclosure of the PHI not provided for under
               this Agreement, of which IBM becomes aware promptly but in no
               event later than five (5) Business Days of first learning of any
               such use or disclosure.

          (v)  Use of Agents and Subcontractors. IBM shall ensure that any
               Approved Subcontractors or agents to whom IBM provides PHI
               created or received pursuant to this Agreement agree to the same
               restrictions and conditions, as set forth in this Section 15.4,
               that apply to IBM with respect to such PHI.

          (vi) Availability of Information to Empire. Within ten (10) Business
               Days of receipt of a request from Empire, IBM shall, in
               accordance with such Empire request, make PHI available to
               Empire, provide Empire access to PHI, and/or make a copy of PHI
               available to Empire, all in accordance with the Privacy Rule,
               including 45 C.F.R. (S) 164.524. If the individual requests PHI
               directly from IBM, IBM shall not give the individual access to
               the PHI unless access is approved by Empire. Empire shall have
               full discretion to determine whether the individual shall be
               given access. If and to the extent that the IBM project office
               supporting the Empire environment or any IBM personnel providing
               Services to Empire receives, directly or indirectly, a request
               from an individual requesting PHI, IBM shall use Commercially
               Reasonable Efforts to notify Empire in writing promptly after and
               of such individual's request for PHI, as set forth in the
               previous two sentences, but in no event later than ten (10)
               Business Days of receiving such request.

          (vii) Amendment of PHI. Within ten (10) Business Days of a request
               from Empire, IBM shall make Empire's PHI available to Empire as
               it may request to fulfill its obligations to amend such PHI
               pursuant to the Privacy Rule, including 45 C.F.R. (S) 164.526.
               IBM shall incorporate any amendments to Empire's PHI into any and
               all PHI IBM maintains. If the individual requests an amendment to
               PHI directly from IBM, IBM shall not amend the PHI unless
               directed by Empire. Empire shall have full discretion to
               determine whether the amendment shall occur. If and to the extent
               that the IBM project office supporting the Empire environment or
               any IBM personnel providing Services to Empire receives, directly
               or indirectly, a request from an individual requesting PHI, IBM
               shall use Commercially Reasonable Efforts to notify Empire in
               writing promptly after and of such individual's request for an
               amendment to PHI, as set forth in the previous two sentences, but
               in no event later than ten (10) Business Days of receiving such
               request.

          (viii) Accounting of PHI. Within ten (10) Business Days of notice by
               Empire of a request for an accounting of disclosures of PHI by
               IBM or its subcontractors, IBM shall make available the account
               of such disclosures to Empire as requested for Empire to fulfill
               its obligations to provide an accounting pursuant to the Privacy
               Rule, including 45 C.F.R. (S) 164.528. IBM shall implement a
               process that allows for such an accounting. If the individual
               requests an accounting of

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               disclosures of PHI directly from IBM, IBM shall not provide the
               individual the account of such disclosures unless directed by
               Empire. Empire shall have full discretion to determine whether
               the individual shall be given such accounting. If and to the
               extent that the IBM project office supporting the Empire
               environment or any IBM personnel providing Services to Empire
               receives, directly or indirectly, a request from an individual
               requesting PHI, IBM shall use Commercially Reasonable Efforts to
               notify Empire in writing promptly after and of such individual's
               request for an accounting of disclosures of PHI, as set forth in
               the previous two sentences, but in no event later than ten (10)
               Business Days of receiving such request.

          (ix) Availability of Books and Records. As required by the Privacy
               Rule, IBM shall make its internal practices, books, and records
               relating to the use and disclosure of PHI received or created
               pursuant to this Agreement available to the Secretary of Health
               and Human Services for purposes of determining Empire's (or any
               covered entities that Empire services) compliance with the
               Privacy Rule.

          (x)  Record Retention. IBM shall retain all PHI received from Empire,
               or created or received in the course of performing its
               obligations under this Agreement, for the duration of the Term of
               this Agreement unless otherwise directed by Empire.

     (c)  Audits and Inspection. Notwithstanding any provision set forth in
          Article 11 to the contrary, if Empire, in good faith, believes that
          IBM has breached any provision of this Section 15.4, then upon
          providing five (5) Business Days' written notice, Empire may inspect
          IBM's facilities, systems, books, records, agreements, policies and
          procedures relating to the use or disclosure of PHI pursuant to the
          Agreement, for the purpose of determining whether IBM has complied
          with this Agreement.

     (d)  Termination by Empire for Material Violation.

          (i)  Subject to Section 15.4(d)(ii), Empire may terminate this
               Agreement, in accordance with Section 21.1(a), if IBM violates a
               material term of this Section 15.4. Upon termination of this
               Agreement for any reason, IBM shall return and/or destroy all PHI
               received or created pursuant to this Agreement that IBM maintains
               in any form, and shall retain no copies of such PHI; or, if
               return or destruction is not feasible, IBM shall continue to
               extend protections of this Agreement to such information, and
               limit further use or disclosure of such PHI to those purposes
               that make the return or destruction infeasible, for so long as
               IBM maintains such PHI.

          (ii) Cure. With respect to any IBM violation of a material term of
               Section 15.4(d)(i), IBM shall have the opportunity to cure such
               violation, as set forth in Section 21.1(a). If such violation is
               not cured within the time period set forth in Section 21.1(a),
               Empire may declare a material breach of the Agreement in
               accordance with Section 21.1 (a) or, if not feasible, report the
               problem to the Secretary of U.S. Health and Human Services, as
               set forth in 45 C.F.R. (S) 164.504(e)(1)(ii)(B).

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     (e)  Modifications to Privacy Rule. If the Privacy Rule is modified in any
          way impacting this Agreement, the Parties shall, at least sixty (60)
          days prior to the compliance date for such modifications, amend this
          Agreement to ensure compliance with such modifications. Actions to
          achieve such compliance may be New Services.

     (f)  Interpretation of this Agreement. Any ambiguity in the terms set forth
          in this Section 15.4 shall be construed to permit Empire's full
          compliance with the Privacy Rule.

15.5 HIPAA Transactions Rule.

     At least sixty (60) days prior to the compliance date for the HIPAA
     Standards for Electronic Transactions ("Transactions Rule")(codified at 45
     C.F.R. Parts 160 and 162), the Parties shall review this Agreement, and, as
     necessary, modify this Agreement to incorporate any relevant provisions,
     including provisions governing trading partner agreements. Actions to
     achieve such compliance may be New Services.

15.6 HIPAA Security Rule

     At least sixty (60) days prior to the compliance date for the HIPAA
     Security and Electronic Signature Standards ("Security Rule")(63 Fed. Reg.
     43,242 (August 12, 1998)), the Parties shall review this Agreement, and, as
     necessary, modify this Agreement to incorporate any relevant provisions,
     including provisions governing chain of trust partner agreements. Actions
     to achieve such compliance may be New Services.

15.7 Other HIPAA Administrative Simplification Regulations

     At least sixty (60) days prior to the compliance date for any other HIPAA
     Administrative Simplification regulations, the Parties shall review this
     Agreement, and, as necessary, modify this Agreement to incorporate any
     relevant provisions. Actions to achieve such compliance may be New
     Services.

16.  REPRESENTATIONS AND WARRANTIES

16.1 Work Standards, Efficiency and Cost Effectiveness.

     IBM represents and warrants that the Services shall be rendered with
     promptness, efficiency and diligence and shall be executed in a workmanlike
     and cost-effective manner, in accordance with the practices and high
     professional standards used in well-managed operations performing services
     similar to the Services. IBM represents and warrants that it shall use
     adequate numbers of qualified individuals with suitable training,
     education, experience and skill to perform the Services.

16.2 Maintenance.

     IBM represents and warrants that it shall maintain the in-scope Equipment
     and Software used to provide the Services, including (a) maintaining
     Equipment in good operating condition; (b) undertaking repairs and
     preventive maintenance on Equipment in accordance with the applicable
     Equipment manufacturer's recommendations; and (c) performing Software
     maintenance in accordance with the applicable Software vendor's
     documentation and recommendations.

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16.3 Technology

     IBM represents and warrants that it shall keep the Equipment, Software and
     other technologies provided by IBM in performing the Services (and for
     which IBM is responsible) current (which for purposes of this sentence
     shall mean that, subject to Section 3.3(f) of Schedule C, each such
     commercially available technology asset shall be generally supported by the
     respective vendor of such asset), provided, however, that with respect to
     the Equipment and Software appearing on the Refresh Matrix included as
     Attachment A2-B to the Data Center Services Schedule, IBM's
     responsibilities in this sentence shall be limited to, subject to Section
     3.3(f) of Schedule C, complying with such Refresh Matrix. IBM represents
     and warrants that if commercially reasonable, IBM shall implement upgrades
     in technology, allowing the Parties to realize the benefits of any
     applicable increases in efficiency and productivity. IBM shall proactively
     seek out new technologies by surveying key suppliers to identify advances
     or changes in technology that are appropriate and beneficial to Empire, and
     shall contribute to the ongoing development of Empire's strategies,
     principles and standards (including with respect to technical, data and
     Applications architectures) through, at a minimum, periodic technical
     briefings which will present to Empire developments in technology which may
     be applicable to Empire business requirements.

16.4 Non-Infringement.

     (a)  IBM represents and warrants that it shall perform its responsibilities
          under this Agreement in a manner that does not infringe, or constitute
          an infringement or misappropriation of, any patent, copyright,
          trademark, trade secret or other proprietary rights of any third
          party.

     (b)  Empire represents and warrants that it shall perform its
          responsibilities under this Agreement in a manner that does not
          infringe, or constitute an infringement or misappropriation of, any
          patent, copyright, trademark, trade secret or other proprietary rights
          of any third party.

16.5 Authorization and Other Contracts.

     Each Party represents and warrants to the other that:

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

     (b)  The execution, delivery and performance of this Agreement and the
          consummation of the transactions contemplated by this Agreement have
          been duly authorized by the requisite corporate action on the part of
          such Party and will not constitute a violation of any judgment, order
          or decree;

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

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     (d)  There is no proceeding pending or, to the knowledge of the Party,
          threatened which challenges or may have a material adverse affect on
          this Agreement or the transactions contemplated by this Agreement.

16.6 Inducements.

     Each Party represents and warrants to the other Party that it has not
     violated (a) any applicable laws or regulations, or (b) any policies of the
     other Party of which it has been provided written notice in accordance with
     Section 23.4 (with a copy to the IBM Project Executive or the Empire
     Contract Executive, as applicable), regarding the offering of unlawful or
     prohibited inducements of the other Party in connection with this
     Agreement. If at any time during the Term, Empire determines that the
     foregoing warranty is materially inaccurate, then, in addition to any other
     rights Empire may have at law or in equity, Empire shall have the right to
     terminate this Agreement for cause and without cost, without affording IBM
     an opportunity to cure.

16.7 Viruses.

     IBM represents and warrants that it shall use Commercially Reasonable
     Efforts so that no Viruses are coded or introduced into the systems used to
     provide the Services. "Virus" shall mean (i) program code or programming
     instruction or set of instructions intentionally designed to disrupt,
     disable, harm, interfere with or otherwise adversely affect computer
     programs, data files or operations; or (ii) other code typically described
     as a virus or by similar terms, including Trojan horse, worm or backdoor.
     Virus does not include Disabling Code.

     (a)  In the event a Virus is found to have been introduced into the systems
          used to provide the Services, IBM shall (i) use Commercially
          Reasonable Efforts to (including assisting Empire in its efforts to)
          eliminate the effects of the Virus, and (ii) if the Virus causes a
          loss of operational efficiency or loss of data, assist Empire to the
          same extent to mitigate and restore such losses. With respect to IBM's
          initial efforts to perform the services as set forth in Sections
          16.7(a)(i) and 16.7(a)(ii) above ("Initial Efforts"), such Initial
          Efforts shall continue only for a commercially reasonable period of
          time. The Parties acknowledge that (A) if IBM takes reasonable and
          prudent steps with respect to such Initial Efforts, and (B) if IBM's
          performance with respect to Service Levels is affected by such Initial
          Efforts, IBM shall be relieved (with respect to the period of time
          during which IBM took such Initial Efforts) from any failure to meet
          Service Levels, if such failure is due to such Initial Efforts;
          provided that immediately upon completion of IBM's Initial Efforts,
          IBM shall notify Empire if additional time and/or efforts will be
          needed to resolve issues with respect to the Virus. In response to
          such notification, Empire will indicate either: (I) that IBM shall
          continue to be relieved from performance with respect to those Service
          Levels affected and that IBM should continue its efforts to respond to
          such Virus, or (II) that IBM shall no longer be relieved from Service
          Levels (in which case IBM shall be relieved of providing Initial
          Efforts unless Empire approves additional resources to respond to the
          Virus).

     (b)  In the event that both Parties used Commercially Reasonable Efforts to
          avoid the introduction of the Virus, IBM's efforts as provided in
          Section 16.7(a): (i) shall be at no additional charge to Empire, to
          the extent in-scope personnel are utilized, and (ii) shall be at
          Empire's cost, to the extent additional resources are utilized,
          provided that Empire shall have the right to approve use of all such
          additional resources.

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     (c)  If IBM is found to have not used Commercially Reasonable Efforts to
          avoid the introduction of the Virus: (i) IBM's efforts as set forth in
          Section 16.7(a) shall be at no additional charge to Empire; (ii) IBM
          shall engage additional resources, at IBM's cost, as necessary; and
          (iii) notwithstanding Section 16.7(a) above, after completion of IBM's
          Initial Efforts, IBM shall not be excused (as provided in Section
          16.7(a)) with respect to those Service Levels affected, unless IBM's
          efforts to meet such affected Service Levels would cause or allow the
          Virus to spread.

     (d)  Notwithstanding Sections 16.7(a)-(c), to the extent that IBM does not
          utilize additional resources to comply with its obligations under
          Sections 16.7(a)-(c) (and irrespective of whether either Party used
          Commercially Reasonable Efforts to avoid the introduction of the
          Virus), there will be no cost to Empire for IBM's efforts under
          Sections 16.7(a)-(c); otherwise, subject to Section 16.7(c)(ii),
          Empire will be responsible for the cost of such additional resources,
          provided that Empire shall have the right to approve use of all such
          additional resources.

16.8 Disabling Code.

     IBM represents and warrants that, without the prior written consent of
     Empire, IBM shall not insert into the Software any code which would have
     the effect of disabling or otherwise shutting down all or any portion of
     the Services ("Disabling Code"); provided, however, that "Disabling Code"
     shall not include programming code, programming instruction or set of
     instructions that that is distributed as part of hardware or software to
     ensure that the purchaser or licensee uses the product in accordance with
     the acquisition or license agreement (such code "Commercially-Provided
     Disabling Code") and which Software already contains such
     Commercially-Provided Disabling Code. IBM further represents and warrants
     that, with respect to any Disabling Code and Commercially-Provided
     Disabling Code that may be part of the Software, IBM shall not invoke such
     Disabling Code or Commercially-Provided Disabling Code at any time,
     including upon expiration or termination of this Agreement for any reason,
     without Empire's prior written consent.

16.9 Deliverables.

     IBM represents and warrants that each Deliverable (as defined in the Core
     Applications Schedule A) produced by Applications Software development
     projects undertaken by IBM, or for which IBM otherwise has responsibility
     for the successful completion as part of the Services, shall not, after
     final acceptance of the Deliverable by Empire, materially deviate from the
     specifications and requirements for such Deliverable set forth or referred
     to in the applicable project plans, provided that this Section 16.9 shall
     not be construed to relieve IBM from correcting any non-material deviations
     from the specifications and requirements for a Deliverable (and for which
     correction IBM shall be responsible).

16.10 SEI/CMM Level 5.

     IBM represents and warrants that its Applications development and
     maintenance operations in India which shall be utilized to provide the
     Services (a) are, as of the Effective Date, certified as complying with the
     requirements necessary to receive a Systems Engineering Institute ("SEI")
     and Capability Maturity Model ("CMM") Level of five (5), and (b) will
     comply with such requirements during the Term. Each three (3) years,
     commencing with the Effective Date, IBM

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     shall seek recertification as SEI/CMM Level five (5); to the extent IBM
     does not attain SEI/CMM Level five (5) during any such recertification, IBM
     shall take such measures as are necessary to achieve such recertification
     as SEI/CMM Level five (5) within a commercially reasonable period of time.

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16.11 Disclaimer.

     THE WARRANTIES SET FORTH IN THIS AGREEMENT ARE EXCLUSIVE. OTHER THAN AS
     PROVIDED IN THIS AGREEMENT, THERE ARE NO EXPRESS WARRANTIES AND THERE ARE
     NO IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY
     AND FITNESS FOR A PARTICULAR PURPOSE.

     SUBJECT TO ITS OBLIGATIONS CONTAINED IN THIS AGREEMENT, IBM DOES NOT
     WARRANT THE ACCURACY OF ANY REPORT, DATA OR OTHER MATERIAL DELIVERED TO
     EMPIRE, AND IBM SHALL NOT BE LIABLE FOR ANY INACCURACY THEREOF, ALL TO THE
     EXTENT THAT THE INACCURACY RESULTS FROM INACCURATE DATA SUPPLIED BY EMPIRE.

     IBM does not warrant uninterrupted or error-free operation of any machines,
     software, products, or Services or that IBM will find or correct all
     defects.

17.  INSURANCE

17.1 Insurance Coverage.

     IBM shall during the Term have and maintain in force at least the following
     insurance coverages:

     (a)  Employer's Liability Insurance, including coverage for occupational
          injury, illness and disease, and other similar social insurance with
          minimum limits per employee and per event of $1,000,000 and a minimum
          aggregate limit of $1,000,000 or the minimum limits required by law,
          whichever limits are greater.

     (b)  Worker's Compensation Insurance, including coverage for occupational
          injury, illness and disease, and other similar social insurance in
          accordance with the laws of the country, state or territory exercising
          jurisdiction over the employee.

     (c)  Comprehensive General Liability Insurance, including Products,
          Completed Operations, Premises Operations Personal and Advertising
          Injury, Contractual and Broad Form Property Damage liability
          coverages, on an occurrence basis, with a minimum combined single
          limit per occurrence of $5,000,000 and a minimum combined single
          aggregate limit of $10,000,000. This coverage shall be endorsed to
          name Empire as additional insured.

     (d)  Electronic Data Processing Insurance providing coverage for all risks
          of loss or damage to IBM's equipment, data, media and valuable papers,
          with a minimum limit adequate to cover such risks on a replacement
          cost or upgrade basis or $10,000,000, whichever is greater. Such
          insurance shall include Extra Expense and Business Income coverage for
          IBM with a separate minimum limit equal to $10,000,000.

     (e)  Property Insurance for all risks of physical loss of or damage to
          buildings, business personal property (except property covered by
          Electronic Data Processing Insurance) or other property that is in the
          possession, care, custody or control of IBM pursuant to this

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          Agreement, with a minimum limit adequate to cover risks on a
          replacement costs basis. Such insurance shall include Extra Expense
          and Business Income coverage for IBM with a separate minimum limit
          equal to $36,000,000.

     (f)  Automotive Liability Insurance covering use of all owned, non-owned
          and hired automobiles for bodily injury, property damage, uninsured
          motorist and underinsured motorist liability with a minimum combined
          single limit per accident of $1,000,000 or the minimum limit required
          by law, whichever limit is greater. This coverage shall be endorsed to
          name Empire as additional insured.

     (g)  Commercial Crime Insurance, including blanket coverage for Employee
          Dishonesty and Computer Fraud, for loss or damage arising out of or in
          connection with any fraudulent or dishonest acts committed by the
          employees of IBM, acting alone or in collusion with others, including
          the property and funds of others in their possession, care, custody or
          control, with a minimum limit per event of $10,000,000.

     (h)  Errors and Omissions Liability Insurance covering liability for loss
          or damage due to an act, error, omission or negligence, or due to
          machine malfunction, with a minimum limit per event of $10,000,000.

     (i)  Umbrella Liability Insurance with a minimum limit of $50,000,000 in
          excess of the insurance coverage described in Sections 17.1(a),
          17.1(c) and 17.1(f).

17.2 Insurance Terms.

     (a)  The insurance coverages under Sections 17.1(a) through 17.1(h) shall
          be primary, except with respect to Section 17.1(c) for work performed
          at Empire Facilities, and all coverage shall be non-contributing with
          respect to any other insurance or self insurance which may be
          maintained by Empire. To the extent any coverage is written on a
          claims-made basis, it shall allow for reporting of claims until the
          later of one (1) year after the Term or the expiration of the period
          of the applicable limitations of actions.

     (b)  IBM shall cause its insurers to issue certificates of insurance
          evidencing that the coverages and policy endorsements required under
          this Agreement are maintained in force and that not less than thirty
          (30) days' written notice shall be given to Empire prior to any
          modification, cancellation or non-renewal of the policies. The
          insurers selected by IBM shall be of good standing and authorized to
          conduct business in the jurisdictions in which Services are to be
          performed. When the policy is issued each such insurer shall have at
          least an A.M. Best rating of A- and replacement coverage shall be
          sought if the insurer's rating goes below B+, except for Property
          Insurance in the United States where IBM may use its own captive
          insurance company to meet regulatory requirements. IBM shall assure
          that its subcontractors, if any:

          (i)  are endorsed as additional insureds on IBM coverages specified by
               this Article 17; or

          (ii) maintain:

               (A)  such insurance provided in Section 17.1(a), with minimum
                    limits of $1,000,000;

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               (B)  such insurance provided in Section 17.1(b);

               (C)  such insurance provided in Section 17.1(c), with minimum
                    limits of $1,000,000, which coverage shall be endorsed to
                    name IBM as additional insured; and

               (D)  such insurance provided in Section 17.1(f), with minimum
                    limits of $250,000 per person and $500,000 per occurrence,
                    which coverage shall be endorsed to name IBM as additional
                    insured.

     (c)  In the case of loss or damage or other event that requires notice or
          other action under the terms of any insurance coverage specified in
          this Article 17, IBM shall be solely responsible to take such action.
          IBM shall provide Empire with contemporaneous notice and with such
          other information as Empire may request regarding the event. Moreover,
          Empire shall provide to IBM reasonable assistance and cooperation with
          respect to any insurance claim.

     (d)  IBM's obligation to maintain insurance coverage shall be in addition
          to, and not in substitution for, IBM's other obligations hereunder and
          IBM's liability to Empire shall not be limited to the amount of
          coverage required hereunder.

18.  INDEMNITIES

18.1 Indemnity by IBM.

     IBM agrees to defend, at its expense, Empire and its Affiliates and their
     respective officers, directors, employees, agents, successors and assigns
     against any and all non-Affiliated third party claims set forth below:

     (a)  Any claim alleging an IBM failure to observe or perform any duties or
          obligations to be observed or performed on or after the Effective Date
          by IBM under any of the contracts, including Software licenses,
          Equipment leases and Third Party Services Contracts, assigned to IBM
          or for which IBM has assumed financial, administrative or operational
          responsibility; provided that IBM shall not be responsible for any IBM
          failure due to Empire's express instruction to IBM to continue to
          operate under any of such contracts in violation of the duties or
          obligations thereunder;

     (b)  Any claims of infringement or misappropriation of any patent, trade
          secret, trademark, copyright or other proprietary rights, alleged to
          have occurred because of systems or other resources provided by IBM to
          Empire, or based upon performance of the Services by IBM; provided
          that:

          (i)  this indemnity shall apply to third party systems or third party
               resources unless: (A) with respect to third party systems or
               other third party resources provided by IBM to Empire, IBM
               determines that the indemnity provided by such third party with
               respect to such systems or other resources is more limited than
               the indemnity provided in this Section 18.1(b), and (B) IBM,
               prior to using such systems or resources, notifies Empire and
               requests that IBM's indemnity

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               obligations be similarly limited as the indemnity offered by the
               third party and Empire approves the limited indemnity in writing;
               provided however, that if Empire does not approve the limited
               indemnity, then: (I) if IBM proceeds with providing such third
               party system or third party resource, then IBM shall be
               responsible for the indemnity set forth in this Section 18.1(b),
               or (II) IBM shall not provide such third party system or third
               party resource; provided however, that such a decision by IBM not
               to provide such system or resource shall not relieve IBM of its
               obligation to provide the Services. Notwithstanding items (I) and
               (II), Empire shall have the right to separately negotiate with
               the third party providing such limited indemnity, or any other
               third party, and to be legally responsible for such system or
               resource; and

          (ii) IBM shall have no obligation to indemnify Empire if and only to
               the extent that such Loss arises out of:

               (A)  Empire's or Empire's agents modification of such Equipment,
                    Software or products or use by Empire of such Equipment,
                    Software or products in other than their specified operating
                    environment, unless such modification or use was at the
                    direction, request or recommendation of, or in accordance
                    with the specifications provided by, IBM;

               (B)  Empire's or Empire's agents combination of such Equipment,
                    Software or products with products, data, or apparatus not
                    provided by IBM unless such combination was at the
                    direction, request or recommendation of, or in accordance
                    with the specifications provided by, IBM;

               (C)  any portion of such Equipment, Software or products that are
                    designed in accordance with written, detailed specifications
                    provided by Empire, to the extent that infringement
                    necessarily arises from such specifications;

               (D)  any health care business process employed by Empire as of
                    the Effective Date and followed by IBM, and any IT business
                    process employed by Empire as of the Effective Date and
                    followed by IBM, which health care business process or IT
                    business process Empire specifically directs IBM to follow;
                    provided, however that with respect to IT business
                    processes, this item (D) shall only apply to claims arising
                    and asserted during the one (1) year following transition of
                    the Services from which the claim arises;

               (E)  any infringement or misappropriation claims for which Empire
                    is required to indemnify IBM under Section 18.2(b); or

               (F)  any claims of patent infringement, including contributory
                    infringement or inducement to infringe, of any call center
                    patents. Notwithstanding the previous sentence, IBM shall
                    have an obligation to indemnify Empire, in accordance with
                    this Article 18, for any claims of patent

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                    infringement, including contributory infringement or
                    inducement to infringe, of any call center patents where:

                    (I)  (1)calls to the Help Desk are related solely to
                         information technology issues and questions related
                         directly to the Services; (2) the Help Desk Services
                         are provided from facilities owned or leased by IBM or
                         its Affiliates; and (3) no entity other than IBM or its
                         Affiliates update databases associated with provision
                         of the Help Desk Services (e.g., databases tracking
                         help desk calls and trouble tickets); or

                    (II) IBM fails to comply with applicable IBM licenses for
                         call center patents, if any, and such failure directly
                         causes a Loss to Empire.

                    IBM is only obligated to provide Help Desk Services in
                    accordance with Schedule A-3. IBM shall not be responsible
                    for determining whether Empire requires a license to call
                    center patents, obtaining any such license on Empire's
                    behalf, or paying any fees relating to any such licenses.

     (c)  Any claim or action by, on behalf of, or related to, a Transitioned
          Employee's employment with IBM arising on or after the Employment
          Start Date for such employee, including claims arising under
          occupational health and safety, worker's compensation, ERISA or other
          applicable federal, state, or local laws or regulations;

     (d)  Any claim or action by IBM's subcontractors arising out of IBM's
          breach or violation of IBM's subcontracting arrangements;

     (e)  Any claim alleging a violation by IBM or act or omission of IBM
          arising out of or relating to:

          (i)  any law or regulation for the protection of persons or members of
               a protected class or category of persons,

          (ii) sexual discrimination or harassment, or

          (iii) any other aspect of the employment relationship between or among
               IBM, IBM Personnel, IBM's subcontractors or agents or the
               termination of such relationship (including claims for breach of
               a contract of employment);

     (f)  Any claim alleging an IBM breach of its obligations with respect to
          Confidential Information set forth in Article 15;

     (g)  Any claim with respect to IBM's use of any Third Party Software to the
          extent the Loss results from a breach by IBM of any provisions of the
          applicable third party license agreement;

     (h)  Any environmental claims (i.e., hazardous materials, asbestos, but not
          environmental problems such as non-functioning chillers, air
          conditioning) arising at IBM's facilities,

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          except to the extent that the environmental claim or damage is caused
          by Empire or arises from a failure of Empire's responsibilities;
          provided however, that any environmental claims related to the Staten
          Island Data Center shall be governed by the provisions of the Staten
          Island Data Center Sublease between the Parties;

     (i)  Any claim alleging an IBM failure to obtain and provide to Empire any
          Required Consent which IBM is obligated to provide under this
          Agreement; and

     (j)  Any claim arising out of or related to occurrences that are covered by
          the insurance coverages IBM is required to insure against pursuant to
          Section 17.1(c) or 17.1(f), but only if IBM has failed to obtain the
          required insurance coverage or obtained coverage in an amount less
          than the insurance coverage limits that IBM is required to maintain
          pursuant to such Sections and only to the extent such a claim would
          have been covered under such insurance policies. In no event shall
          IBM's liability under this Section 18.1(j) be greater, in the
          aggregate, than the amount of insurance coverage IBM is required to
          maintain pursuant to Article 17. The limitations set forth in this
          Section 18.1(j) are not intended to otherwise limit IBM's overall
          liability, but only IBM's liability under this Section 18.1(j).

18.2 Indemnity by Empire.

     Empire agrees to defend, at its expense, IBM and its Affiliates and their
     respective officers, directors, employees, agents, successors and assigns
     against any and all non-Affiliated third party claims set forth below:

     (a)  Any claim alleging an Empire failure to observe or perform any duties
          or obligations to be observed or performed (i) prior to the Effective
          Date by Empire under any of the contracts, including Software
          licenses, Equipment leases and Third-Party Services Contracts,
          assigned to IBM or for which IBM has assumed financial, administrative
          or operational responsibility, and (ii) during the Term under such
          contracts, if and only to the extent Empire retains any duties or
          obligations with respect to such contracts;

     (b)  Any claims of infringement or misappropriation of any patent, trade
          secret, trademark, copyright or other proprietary rights, alleged to
          have occurred because of Equipment and Software (except IBM Logoed
          Equipment and IBM Software) provided by Empire to IBM to be utilized
          by IBM in connection with the Services and only to the extent that IBM
          so uses such Equipment and Software solely in connection with the
          Services or otherwise for Empire's benefit; provided that Empire shall
          have no obligation to indemnify IBM if and only to the extent that
          such Loss arises out of:

          (i)  IBM's, or any IBM subcontractor's, modification of such
               Equipment, Software or products or use by IBM of such Equipment,
               Software or products in other than their specified operating
               environment or unless such modification or use was at the
               direction, request or recommendation of, or in accordance with
               the specifications provided by, Empire;

          (ii) IBM's or any IBM subcontractor's combination of such Equipment,
               Software or products with products, data, or apparatus not
               provided by Empire unless such

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               combination was at the direction, request or recommendation of,
               or in accordance with the specifications provided by, Empire;

          (iii) any portion of such Equipment or Software that are designed in
               accordance with written, detailed specifications provided by IBM,
               to the extent that infringement necessarily arises from such
               specifications; or

          (iv) any infringement or misappropriation claims for which IBM is
               required to indemnify Empire under Section 18.1(b).

     (c)  Any claim or action by, on behalf of, or related to, a Transitioned
          Employee's employment with Empire arising prior to the Employment
          Start Date for such employee, including claims arising under the
          occupational health and safety, worker's compensation, ERISA or other
          applicable federal, state or local laws or regulations;

     (d)  Any claim alleging a violation by Empire or act or omission of Empire
          arising out of or relating to:

          (i)  any law or regulation for the protection of persons or members of
               a protected class or category of persons,

          (ii) sexual discrimination or harassment, or

          (iii) any other aspect of the employment relationship between Empire,
               Empire employees, its subcontractors or its agents or the
               termination of such relationship (including claims for breach of
               a contract of employment);

     (e)  Any claim alleging an Empire breach of its obligations with respect to
          Confidential Information set forth in Article 15;

     (f)  Any claim with respect to Empire's use of any Third Party Software not
          provided by IBM to the extent the Loss results from a breach by Empire
          of any provisions of the applicable third party license agreement; and

     (g)  Any environmental claims (i.e., hazardous materials, asbestos, but not
          environmental problems such as non-functioning chillers, air
          conditioning) arising at Empire's facilities, except to the extent
          that the environmental claim or damage is caused by IBM or arises from
          a failure of IBM's responsibilities; provided however, that any
          environmental claims related to the Staten Island Data Center shall be
          governed by the provisions of the Staten Island Data Center Sublease
          between the Parties.

18.3 Additional Indemnities.

     IBM and Empire each agree to defend the other, and its Affiliates,
     officers, directors, employees, agents, successors and assigns, against any
     and all non-Affiliated third party claims set forth below: (a) the death or
     bodily injury of any agent, employee (other than an employee of the
     indemnitor), customer, business invitee, or business visitor or other
     person caused by the tortious conduct of the indemnitor; (b) the damage,
     loss or destruction of any real or tangible personal property caused by the
     tortious conduct of the indemnitor; and (c) any claim, demand, charge,

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     action, cause of action, or other proceeding asserted against the
     indemnitee but resulting from an act or omission of the indemnitor in its
     capacity as an employer of a person.

18.4 Procedures With Respect to Indemnities.

     If IBM or Empire is obligated to provide the defense, as provided in
     Section 18.1, 18.2 or 18.3, then subject to the procedures provided in
     Section 18.6, such Party shall pay to the other Party all Losses (a)
     finally awarded to a third party, or (b) paid via settlement to a third
     party. The Parties acknowledge that such Losses shall not be limited by
     Section 19.2(a).

18.5 Infringement.

     If any item used by IBM to provide the Services becomes, or in IBM's
     reasonable opinion is likely to become, the subject of an infringement or
     misappropriation claim or proceeding, IBM shall, in addition to
     indemnifying Empire and in addition to Empire's other rights, promptly take
     the following actions, at no additional charge to Empire, in the listed
     order of priority: (a) promptly at IBM's expense secure the right to
     continue using the item, or (b) if this cannot be accomplished with
     Commercially Reasonable Efforts, then at IBM's expense, replace or modify
     the item to make it non-infringing or without misappropriation, provided
     that any such replacement or modification will not degrade the performance
     or quality of the affected component of the Services, or (c) if neither of
     the foregoing can be accomplished by IBM with Commercially Reasonable
     Efforts, and only in such event, then remove the item from the Services, in
     which case IBM's charges shall be equitably adjusted to reflect such
     removal, or if in Empire's reasonable opinion such removal is material to
     all or any portion of the remaining Services Empire may terminate such
     portion of the affected Services or the entire Agreement, as the case may
     be, without penalty. The foregoing in this Section 18.5 shall not apply
     with respect to any non-IBM Software or non-IBM Logoed Equipment: (i) made
     available to IBM by Empire but for which Empire retains legal
     responsibility; or (ii) assigned to IBM by Empire and for which IBM has not
     re-negotiated, renewed, extended or replaced the underlying license, lease,
     or other applicable agreement. In the event of any infringement or
     misappropriation claim or proceeding related to non-IBM Software or non-IBM
     Logoed Equipment specified in item (ii) in the previous sentence, IBM shall
     pursue remedies available within such underlying license, lease, or other
     applicable agreement.

18.6 Indemnification Procedures.

     With respect to third party claims the following procedures shall apply:

     (a)  Notice. Promptly after receipt by any entity entitled to
          indemnification under Sections 18.1 through 18.3 of notice of the
          assertion or the commencement of any action, proceeding or other claim
          by a third party in respect of which the indemnitee will seek
          indemnification pursuant to any such Section, the indemnitee shall
          promptly notify the indemnitor of such claim in writing. No failure to
          so notify an indemnitor shall relieve it of its obligations under this
          Agreement except to the extent that it can demonstrate damages
          attributable to such failure. Within fifteen (15) days following
          receipt of written notice from the indemnitee relating to any claim,
          but no later than ten (10) days before the date on which any response
          to a complaint or summons is due, the indemnitor shall notify the
          indemnitee in writing if the indemnitor acknowledges its
          indemnification

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          obligation and elects to assume control of the defense and settlement
          of that claim (a "Notice of Election").

     (b)  Procedure Following Notice of Election.

          If the indemnitor delivers a Notice of Election relating to any claim
          within the required notice period, the indemnitor shall be entitled to
          have sole control over the defense and settlement of such claim;
          provided that (i) the indemnitor shall obtain the prior written
          approval of the indemnitee before entering into any non-monetary
          settlement of such claim or ceasing to defend against such claim and
          (ii) the indemnitee shall be entitled to participate in the defense of
          such claim and to employ counsel at its own expense to assist in the
          handling of such claim. After the indemnitor has delivered a Notice of
          Election relating to any claim in accordance with Section 18.6(a), the
          indemnitor shall not be liable to the indemnitee for any legal
          expenses incurred by the indemnitee in connection with the defense of
          that claim, except for legal expenses incurred by the indemnitee in
          providing assistance requested by the indemnitor. In addition, the
          indemnitor shall not be required to indemnify the indemnitee for any
          amount paid or required to be paid by the indemnitee in the settlement
          of any claim for which the indemnitor has delivered a timely Notice of
          Election if such amount was agreed to without the written consent of
          the indemnitor. The indemnitee shall provide such reasonable
          assistance in connection with the defense and settlement of the claim
          as may be requested by the indemnitor, at the expense of the
          indemnitor; or

     (c)  Procedure Where No Notice of Election Is Delivered. If the indemnitor
          does not deliver a Notice of Election relating to a claim, or
          otherwise fails to acknowledge its indemnification obligation or to
          assume the defense of a claim, within the required notice period, or
          fails to reasonably diligently defend the claim, the indemnitee shall
          have the right to defend the claim in such manner as it may deem
          appropriate, at the cost, expense, and risk of the indemnitor,
          including payment of any judgment or award and the costs of settlement
          or compromise of the claim. The indemnitor shall promptly reimburse
          the indemnitee for all such costs and expenses, including payment of
          any judgment or award and the costs of settlement or compromise of the
          claim. If it is determined that the indemnitor failed to defend a
          claim for which it was liable, the indemnitor shall not be entitled to
          challenge the amount of any settlement or compromise paid by the
          indemnitee.

18.7 Subrogation.

     In the event that an indemnitor shall be obligated to indemnify an
     indemnitee pursuant to this Article 18, the indemnitor shall, upon
     fulfillment of its obligations with respect to indemnification, including
     payment in full of all amounts due pursuant to its indemnification
     obligations, be subrogated to the rights of the indemnitee with respect to
     the claims to which such indemnification relates.

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19.  LIABILITY

19.1 General Intent.

     Subject to the specific provisions of this Article 19, it is the intent of
     the Parties that each Party shall be liable to the other Party for any
     actual damages incurred by the non-breaching Party as a result of the
     breaching Party's failure to perform its obligations in the manner required
     by this Agreement.

19.2 Liability Restrictions.

     (a)  SUBJECT TO SECTION 19.2(c), IN NO EVENT, WHETHER IN CONTRACT OR IN
          TORT (INCLUDING BREACH OF WARRANTY, NEGLIGENCE AND STRICT LIABILITY IN
          TORT), SHALL A PARTY BE LIABLE FOR INDIRECT OR CONSEQUENTIAL,
          EXEMPLARY, PUNITIVE OR SPECIAL DAMAGES EVEN IF SUCH PARTY HAS BEEN
          ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE.

     (b)  Subject to Section 19.2(d), each Party's total and aggregate liability
          to the other under this Agreement, whether in contract or in tort
          (including breach of warranty, negligence and strict liability in
          tort) shall be limited to an amount equal to the total charges payable
          to IBM by Empire pursuant to this Agreement for the [**] prior to the
          month in which the first event giving rise to the liability occurred;
          provided that such amount shall be increased to the total charges
          payable to IBM by Empire pursuant to this Agreement for the [**] prior
          to the month in which the first event giving rise to the liability
          occurred, if and to the extent that either Party suffers damages
          occasioned by (i) the tortious willful misconduct or tortious gross
          negligence of the other Party; or (ii) in the case of IBM, the failure
          to provide Termination/Expiration Assistance to Empire, in accordance
          with this Agreement. If the first event giving rise to liability
          occurs during the [**] after the Effective Date [**], liability shall
          be limited to an amount equal to the total charges that would be
          payable to IBM pursuant to this Agreement for proper performance for
          the Services during such [**] period [**]. Service Level Credits do
          not count against and do not reduce the amounts available under the
          foregoing limitations.

     (c)  The limitations set forth in Section 19.2(a) shall not apply with
          respect to damages occasioned by a Party's breach of its obligations
          with respect to Confidential Information. For clarification, the
          limitations set forth in Section 19.2(a) shall not apply with respect
          to: (i) any and all Losses to be paid pursuant to Section 18.4, (ii)
          fines, penalties, interest and similar financial obligations levied as
          a result of a Party's breach of Section 22.1 of this Agreement; or
          (iii) charges due and payable to IBM under the Agreement (including
          amounts owing for Services rendered).

     (d)  The limitations set forth in Section 19.2(b) shall not apply with
          respect to:

          (i)  any and all Losses to be paid pursuant to Section 18.4;

          (ii) damages occasioned by a Party's breach of its obligations with
               respect to Confidential Information;

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          (iii) fines, penalties, interest and similar financial obligations
               levied as a result of a Party's breach of Section 22.1 (a) of
               this Agreement; and

          (iv) Empire's failure to pay any charges due and payable to IBM under
               the Agreement (including amounts owing for Services rendered).

     (e)  The following shall be considered direct damages and shall not be
          considered consequential damages to the extent they result from a
          Party's failure to fulfill its obligations in accordance with this
          Agreement:

          (i)  costs of restoring, reloading, and (if necessary) recreating any
               of Empire's information lost or damaged (including journals and
               logs), in the event that IBM fails to make backups as required
               under the Agreement (including failure to accurately or
               completely make such backups) or fails to maintain and store such
               backups;

          (ii) costs of implementing a workaround in respect of a failure to
               provide the Services;

          (iii) costs of replacing lost or damaged equipment, software and
               materials;

          (iv) costs and expenses incurred to correct errors in software
               maintenance and enhancements provided as part of the Services,
               provided that this provision shall not be read to increase a
               Party's obligations under this Agreement;

          (v)  costs and expenses incurred to procure the Services from an
               alternate source; and

          (vi) incremental compensation incurred by Empire or its Affiliates for
               full-time and temporary personnel, and any required travel
               expenses, telecommunication charges, and similar charges,
               reasonably incurred by Empire in mitigating the effects of the
               failure of IBM to provide the Services (including
               Termination/Expiration Assistance) or incurred in connection with
               (i) through (v) above, but excluding any costs associated with
               relationship management of Empire's customers due to any such
               failure (collectively "Overtime Damages").

          The foregoing shall not preclude either Party from proving other
          direct damages. If and only if Overtime Damages exceed one hundred
          thousand dollars ($100,000) per event or series of related events
          causing such Overtime Damages, Empire may claim such Overtime Damages
          with respect to such event or series of related events, up to an
          amount equal to five hundred thousand dollars ($500,000), subject to
          the cumulative limits specified in Section 19.2(b). Notwithstanding
          the previous sentence, in the event of a failure by IBM to provide
          Termination/Expiration Assistance in accordance with this Agreement,
          the foregoing limits shall not apply to a claim by Empire for Overtime
          Damages, except that such Overtime Damages shall be subject to the
          limits specified in Section 19.2(b). In any event, the amount of
          Overtime Damages shall be reduced by the Service Level Credits
          applicable to the event or series of events which lead to the Overtime
          Damages. The foregoing states IBM's entire liability for Overtime
          Damages.

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     (f)  Each Party shall have a duty to mitigate damages for which the other
          Party is responsible.

19.3 Force Majeure.

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

     (b)  In such event the non-performing Party shall be excused from further
          performance or observance of the obligations so affected for as long
          as such circumstances prevail and such Party continues to use
          Commercially Reasonable Efforts to recommence performance or
          observance without delay. Any Party so delayed in its performance
          shall immediately notify the Party to whom performance is due by
          telephone (to be confirmed in writing within twenty-four (24) hours of
          the inception of such delay) and describe at a reasonable level of
          detail the circumstances causing such delay.

     (c)  If any event under Section 19.3(a) substantially prevents, hinders or
          delays performance of the Services substantially interfering with
          Empire's business for more than three (3) consecutive days, then at
          Empire's option: (A) Empire may procure such Services from an
          alternate source, and IBM shall be liable for payment for such
          Services from the alternate source, less any amounts that Empire did
          not pay to IBM as the result of Services not being rendered, for so
          long as the delay in performance shall continue; (B) effective
          beginning seven (7) days after the occurrence of the force majeure
          event, Empire may terminate any portion of this Agreement so affected,
          subject only to Empire payment of Wind Down Costs, and the charges
          payable hereunder shall be equitably adjusted to reflect those
          terminated Services; or (C) effective beginning seven (7) days after
          the occurrence of the force majeure event, Empire may terminate this
          Agreement without liability to Empire or IBM, subject only to Empire
          payment of Wind Down Costs, as of a date specified by Empire in a
          written notice of termination to IBM. Subject to the preceding
          sentence, IBM shall not have the right to any additional payments from
          Empire for costs or expenses incurred by IBM as a result of any force
          majeure occurrence. In the event that Empire pays such Wind Down
          Costs, then upon Empire's request, IBM shall convey to Empire the
          Equipment and Software, on a case-by-case basis, which Empire paid for
          as part of such Wind Down Costs.

     (d)  In addition to Empire's rights set forth in this Section 19.3, as a
          premier customer of IBM (as provided in Section 10.8), Empire shall
          receive the following Services with respect to IBM response to a force
          majeure occurrence:

          (i)  Whenever a force majeure occurrence causes IBM to allocate
               limited resources between or among IBM's customers, IBM shall
               allocate such resources in an

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               equitable manner and shall not disadvantage Empire with respect
               to such allocation.

          (ii) In addition, in no event shall IBM re-deploy or reassign any
               personnel filling Key IBM Positions on the Empire account to
               another IBM customer, in the event of a force majeure occurrence;
               provided however, that if a force majeure occurrence affects
               another IBM customer and does not affect Empire, IBM may request
               that Empire allow IBM, subject to IBM's obligations to perform
               the Services in accordance with the Service Levels, to allocate
               certain personnel filling Key IBM Positions to such other IBM
               customers, on a temporary basis. Empire shall consider any such
               IBM request in good faith and determine, in its sole discretion,
               whether to permit such reallocation.

20.  DISPUTE RESOLUTION

     Any dispute between the Parties arising out of or relating to this
     Agreement, including with respect to the interpretation of any provision of
     this Agreement and with respect to the performance by IBM or Empire, shall
     be resolved as provided in this Article 20.

20.1 Informal Dispute Resolution.

     (a)  Subject to Section 20.1(b), the Parties initially shall attempt to
          resolve the dispute informally, in accordance with the following:

          (i)  Upon the written notice by a Party to the other Party of a
               dispute ("Dispute Date"), each Party shall appoint a designated
               representative who does not devote substantially all of his or
               her time to performance under this Agreement, whose task it will
               be to meet for the purpose of endeavoring to resolve such
               dispute.

          (ii) The designated representatives shall meet as often as the Parties
               reasonably deem necessary in order to gather and furnish to the
               other all information with respect to the dispute which the
               Parties believe to be appropriate and germane in connection with
               its resolution. The representatives shall discuss the problem and
               attempt to resolve the dispute without the necessity of any
               formal proceeding.

          (iii) During the course of discussion, all reasonable requests made by
               a Party to the other for non-privileged information, reasonably
               related to the dispute, shall be honored in order that a Party
               may be fully advised of the other's position.

          (iv) The specific format for the discussions shall be left to the
               discretion of the designated representatives.

     (b)  Litigation of a dispute may only be commenced by either Party upon the
          earlier to occur of any of the following:

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

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          (ii) thirty (30) days have elapsed from the Dispute Date (this period
               shall be deemed to run notwithstanding any claim that the process
               described in this Section 20.1 was not followed or completed); or

          (iii) commencement of litigation is reasonably deemed appropriate by a
               Party to avoid the expiration of an applicable limitations period
               or to preserve a superior position with respect to other
               creditors, or a Party makes a good faith determination that a
               temporary restraining order or other injunctive relief is
               necessary with respect to this Agreement.

20.2 Litigation.

     For all litigation which may arise with respect to this Agreement, the
     Parties irrevocably and unconditionally submit (a) to the exclusive
     jurisdiction and venue (and waive any claim of forum non conveniens) of the
     United States District Court for the Southern District of New York or (b)
     if such court does not have jurisdiction, to the Supreme Court of the State
     of New York, New York County. The Parties further consent to the
     jurisdiction of any state court located within a district which encompasses
     assets of a Party against which a judgment has been rendered for the
     enforcement of such judgment or award against the assets of such Party.

20.3 Continued Performance.

     Each Party agrees to continue performing its obligations under this
     Agreement while a dispute is being resolved, except to the extent the issue
     in dispute precludes performance (dispute over payment shall not be deemed
     to preclude performance) and without limiting either Party's right to
     terminate this Agreement as provided in Article 21. Notwithstanding the
     foregoing sentence, IBM may suspend performance upon Empire's failure to
     materially comply with Section 14.7 in an amount equal to at least
     $100,000, within fifteen (15) days of Empire's receipt of written notice
     (sent by certified mail to the Empire Contract Executive) from IBM of such
     failure; provided that IBM shall provide an additional four (4) days'
     written notice (sent by certified mail to the Empire Contract Executive),
     subsequent to the initial fifteen (15) days' notice period, prior to any
     actual suspension of performance.

20.4 Governing Law.

     This Agreement and performance under it shall be governed by and construed
     in accordance with the laws of the state of New York without regard to any
     portion of its choice of law principles which might provide for application
     of a different jurisdiction's law. The Parties expressly intend to avail
     themselves of the benefits of Section 5-1401 of the New York General
     Obligations Law.

20.5 Customer Claims.

     With respect to claims against IBM by Empire's customers related to the
     provision of Services under this Agreement, Empire will use Commercially
     Reasonable Efforts to attempt to resolve any issues with respect to any
     such claim and shall cooperate with IBM in its defense of such claim;
     provided however, that this Section 20.5 shall not obligate Empire to
     formally defend IBM.

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20.6 Waiver of Right to Jury Trial.

     The Parties hereby unconditionally waive their respective rights to a jury
     trial of any claim or cause of action arising directly or indirectly out
     of, related to, or in any way connected with the performance or breach of
     this Agreement, and/or the relationship that is being established among
     them.

21.  TERMINATION

21.1 Termination for Cause.

     (a)  Empire may, by giving written notice to IBM, terminate this Agreement,
          in whole or in-part, for cause and for no-cost, in the event of any of
          the following:

          (i)  IBM commits a material breach of this Agreement, which breach is
               not cured within ten (10) days after notice of such breach is
               received by IBM from Empire; or

          (ii) IBM commits numerous breaches, over a period of one year, of its
               duties or obligations which breaches do not arise out of a single
               event or series of closely related events, and which breaches
               collectively constitute a material breach of this Agreement.

     (b)  Without limiting the generality of Section 21.1(a) of this Agreement,
          if, for any four (4) months within any rolling twelve (12) consecutive
          month period, IBM is assessed as liable to pay Service Level Credits
          equal to the Amount at Risk for the applicable month within respect to
          either (i) the Managed Operations Services, or (ii) the Modernization
          Services, then Empire may, by giving written notice to IBM, terminate
          the affected Services in whole (i.e., the entirety of the Managed
          Operations Services or the Modernization Services, as applicable) for
          cause and for no-cost.

     (c)  In the event that Empire fails to pay IBM when due charges totaling at
          least one (1) month's charges under this Agreement (except for (i)
          amounts set off pursuant to Section 14.6, and (ii) disputed payments
          withheld or paid into escrow pursuant to Section 14.7) and fails to
          make such payment within thirty (30) days of written notice from IBM
          of the failure to make such payment, IBM may by giving written notice
          to Empire terminate this Agreement upon at least thirty (30) days'
          written notice, as specified in the notice of termination.

21.2 Termination for Material Infringement or Breach of Confidentiality.

     Each Party ("Affected Party") may, by giving at least thirty (30) days'
     written notice to the other Party, terminate this Agreement at no-cost to
     the terminating Party, in the event of either of the following:

     (a)  the other Party materially infringes the intellectual property rights
          with respect to the Affected Party's intellectual property, as
          provided or made available by the Affected Party to the other Party
          under this Agreement, or

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     (b)  senior management of the other Party materially breaches its
          responsibilities with respect to Confidential Information of the
          Affected Party,

     which infringement (with respect to item (a)) or breach (with respect to
     item (b)) the other Party does not use Commercially Reasonable Efforts to
     discontinue within twenty (20) days after written notice of such
     infringement or breach is received from the Affected Party by the other
     Party, provided however, that all infringements or breaches that are the
     basis for the Affected Party's right to terminate pursuant to this Section
     21.2 must have occurred within six (6) months of the notice of termination.
     Termination under this Section 21.2 shall be deemed to be for cause.

21.3 Termination for Convenience.

     Effective twenty-four (24) months after the Effective Date (i.e., at the
     beginning of the twenty-fifth (25th) month of the Agreement), Empire may
     terminate this Agreement, in whole or in-part, for convenience and without
     cause at any time by giving IBM at least four (4) months' prior written
     notice designating the termination date and paying to IBM on the effective
     date of termination: (a) the applicable amount specified in Exhibit 10 to
     Schedule C, and (b) Wind Down Costs, although such payment of Wind Down
     Costs shall not be a condition precedent to the termination. The amount due
     IBM pursuant to Schedule C for Wind Down Costs shall not include costs to
     the extent Empire reduces the Wind Down Costs by purchasing Equipment or
     Software from IBM or hiring IBM Personnel, as provided in Section 21.10, or
     other mitigation of such costs. In the event that a purported termination
     for cause by Empire under Section 21.1 is determined by a competent
     authority not to be properly a termination for cause, then such termination
     by Empire shall be deemed to be a termination for convenience under this
     Section 21.3. Any partial termination pursuant to this Section 21.3 shall
     be not less than a complete Tower, unless otherwise agreed by IBM. In the
     event that Empire pays such Wind Down Costs, then upon Empire's request,
     IBM shall convey to Empire the Equipment and Software, on a case-by-case
     basis, which Empire paid for as part of such Wind Down Costs.

21.4 Termination Upon Change of Control.

     (a)  In the event (i) that (A) another entity, directly or indirectly, in a
          single transaction or series of related transactions, acquires either
          Control of IBM or all or substantially all of the assets of IBM, or
          (B) IBM is merged with or into another entity, and (ii) Empire has a
          reasonable concern with such other entity, including such instances in
          which: (I) the entity is an Empire Competitor, (II) the entity has a
          poor relationship with Empire, or (III) Empire has a significant
          concern as to such entity's ability to perform, then, at any time
          within six (6) months after Empire receives notice of the last to
          occur of such events, Empire may terminate this Agreement, for
          no-cost, by giving IBM at least ninety (90) days' prior written notice
          and designating a date upon which such termination shall be effective.

     (b)  In the event that (i) another entity, directly or indirectly, in a
          single transaction or series of related transactions, acquires either
          Control of Empire or all or substantially all of the assets of Empire,
          or (ii) Empire is merged with or into another entity, then, at any
          time within twelve (12) months after Empire receives notice of the
          last to occur of such events, Empire may terminate this Agreement by
          (A) giving IBM at least ninety (90) days' prior written notice and
          designating a date upon which such termination shall be

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          effective, and (B) paying to IBM on the effective date of termination:
          (I) the applicable amount specified in Exhibit 10 to Schedule C, and
          (II) Wind Down Costs, although such payment of Wind Down Costs shall
          not be a condition precedent to the termination. For purposes of this
          Section 21.4(b), an initial public offering shall not be deemed to be
          a change of Control of Empire.

21.5 Termination Due To Force Majeure Event.

     This Agreement may also be terminated in whole or part as provided in
     Section 19.3(c).

21.6 Termination Due To IBM's Financial Inability To Perform.

     If: (a) IBM files any petition in bankruptcy, (b) IBM has an involuntary
     petition in bankruptcy filed against it which is not challenged in twenty
     (20) days and dismissed within sixty (60) days, (c) IBM becomes insolvent,
     (d) IBM makes a general assignment for the benefit of creditors, (e) IBM
     admits in writing its inability to pay its debts as they mature, (f) IBM
     has a receiver appointed for its assets, or (g) IBM has any significant
     portion of its assets attached, then Empire shall have the right to
     terminate this Agreement, subject only to Empire payment of Wind Down
     Costs.

21.7 Additional Termination Rights.

     Given the sensitive nature of the Services provided by IBM to Empire,
     Empire may terminate this Agreement, in whole or in-part, for no-cost, by
     giving written notice to IBM within six (6) months after Empire receives
     notice of any of the following events:

     (a)  IBM enters the health insurance business (provided that IBM's self
          insurance of its own employees, or those of its Affiliates, shall not
          be deemed entering into the health insurance business); or

     (b)  IBM, directly or indirectly, in a single transaction or series of
          related transactions, acquires either (i) Control of, or (ii) all or
          substantially all of the assets of another entity which is in the
          health insurance business and continues to be in the health insurance
          business subsequent to such transaction(s); or

     (c)  another entity which is in the health insurance business acquires,
          directly or indirectly, in a single transaction or series of related
          transactions, either (i) Control of, or (ii) all or substantially all
          of the assets of IBM.

21.8 Charges Upon Partial Termination.

     In the event of any termination in-part by Empire, as provided in this
     Agreement, the charges payable under this Agreement for Services will be
     equitably adjusted to reflect those services that are terminated.

21.9 Extension of Termination/Expiration Effective Date.

     Empire may extend the effective date of termination/expiration one or two
     times as it elects in its discretion, by providing not less than sixty (60)
     days' prior written notice to IBM for each such extension, provided that
     the total of all such extensions shall not exceed one hundred eighty

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     (180) days following the effective date of termination/expiration in place
     immediately prior to the initial extension under this Section.

21.10 Termination/Expiration Assistance.

     (a)  Provision of Services Prior to Termination/Expiration Date. Commencing
          six (6) months prior to expiration of this Agreement or on such
          earlier date as Empire may request, or commencing upon any notice of
          termination or partial termination (as limited by the next sentence),
          including notice based upon default by Empire or of non-renewal of
          this Agreement, and continuing through the effective date of
          expiration or, if applicable, of termination of this Agreement (as
          such effective date may be extended pursuant to Section 21.9), IBM
          shall provide to Empire, or at Empire's request to Empire's designee,
          the reasonable termination/expiration assistance requested by Empire
          to allow the Services to continue in accordance with the terms of the
          Agreement and to facilitate the orderly transfer of the Services to
          Empire or its designee ("Termination/Expiration Assistance"), provided
          that to the extent that termination is pursuant to Section 21.1(c),
          Empire shall either (1) pre-pay the estimated monthly charges for such
          Termination/Expiration Assistance at least thirty (30) days prior to
          each month (which charges shall be trued-up when actual charges become
          available), or (2) post an irrevocable letter of credit (or
          performance bond) in sufficient amount to meet the ongoing charges to
          be incurred. In the event of any partial termination, the provision of
          Termination/Expiration Assistance shall be provided by IBM only as
          applicable to the Services terminated. Termination/Expiration
          Assistance shall include the assistance described in Schedule I and
          the following:

          (i)  Personnel.

               (A)  Prior to expiration or once notice of termination is given
                    for any reason, IBM shall provide to Empire or Empire's
                    designee such information as Empire may reasonably request
                    relating to all employees (including Transitioned Employees)
                    and contractors who are employed or contracted by IBM to
                    perform the Services or functions under the Agreement
                    (including information and copies of any records relating to
                    staffing levels, job titles, salary and benefit levels,
                    length of service, etc.), provided that:

                    (I)  the Parties acknowledge that IBM shall only release
                         salary information of an employee or contractor if such
                         employee or contractor consents to such release;

                    (II) notwithstanding Section 21.10(a)(i)(A)(I), IBM shall,
                         as requested by Empire, inquire of any employee or
                         contractor who is employed or contracted by IBM to
                         perform the Services or functions under the Agreement,
                         whether such employee or contractor will consent to the
                         release of his/her salary information;

                    (III) notwithstanding Sections 21.10(a)(i)(A)(I)-(II), IBM
                         shall provide to Empire salary ranges for IBM positions
                         (i.e.,

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                         minimum salary, median salary, and maximum salary for
                         those employees performing a specific job function);
                         and

                    (IV) IBM shall not be required to disclose any IBM
                         Confidential Information to an Empire designee unless
                         and until such designee has agreed in writing to
                         protect the confidentiality of such Confidential
                         Information in a manner substantially equivalent to
                         that required of Empire under this Agreement.

               (B)  For six (6) months after notice of termination is given for
                    any reason (or if no notice is given, then beginning six (6)
                    months prior to expiration of the Agreement):

                    (I)  IBM shall not make any material changes to the terms
                         and conditions of employment or engagement of IBM's
                         employees or contractors, respectively, who primarily
                         (i.e., greater than fifty percent (50%)) perform (as of
                         the date IBM receives notice of termination for any
                         reason and for six (6) months thereafter (or if no
                         notice is given, then for six (6) months prior to
                         expiration of the Agreement)) Services for Empire under
                         the Agreement; provided that this Section
                         21.10(a)(i)(B)(I) shall not apply with respect to
                         changes that affect IBM employees generally (as opposed
                         to the specific targeting of some or all of the
                         personnel working on the Empire account);

                    (II) Empire shall have such rights as are set forth in
                         Section 21.10(a)(ii) below; and

                    (III) IBM shall not terminate any such employment or
                         engagement contract (other than for misconduct or
                         performance-related issues), nor reassign such employee
                         or contractor away from performance of functions under
                         the Agreement, without Empire's prior written consent.

                    Upon the completion of such six (6) month period as provided
                    in this Section 21.10(a)(i)(B): the provisions of Sections
                    21.10(a)(i)(B)(I) and 21.10(a)(i)(B)(II) shall continue in
                    effect, but Section 21.10(a)(i)(B)(III) shall no longer
                    apply (i.e., IBM may terminate or reassign employees on the
                    Empire account, but such action shall not preclude Empire's
                    ability to hire such employees).

          (ii) Hiring of Personnel. Notwithstanding Section 23.15, for six (6)
               months after notice of termination is given for any reason (or if
               no notice is given, then beginning six (6) months prior to
               expiration of the Agreement), Empire or Empire's designee shall
               be permitted to undertake, without interference from IBM, to hire
               any IBM Personnel whose time is primarily (i.e., greater than
               fifty percent (50%)) devoted to performing the Services for
               Empire as of the date IBM receives notice of termination, or, in
               the case of expiration, within the six (6) month period (or
               longer period requested by Empire) prior to expiration,

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               provided that any such employment with Empire may not be
               effective until the Agreement terminates or expires, including as
               extended by any IBM provision of Termination/Expiration
               Assistance, except to the extent that Empire requests IBM to
               continue to perform the Services pursuant to Section 21.10(b). In
               such event, the employment of those affected employees shall be
               effective upon completion of the Services required pursuant to
               Section 21.10(b). IBM shall waive its rights (and shall use
               Commercially Reasonable Efforts to cause its subcontractors to
               waive their rights), if any, under contracts with such personnel
               restricting the ability of such personnel to be recruited or
               hired by Empire or Empire's designee; provided that such
               Commercially Reasonable Efforts shall not require Empire to make
               payments to such subcontractors for such waiver. IBM will provide
               Empire or Empire's designee with reasonable access to such
               employees for interviews and recruitment, and shall not interfere
               with Empire's or Empire's designee's efforts to hire such
               employees (e.g., by making counteroffers or targeting offers to
               employees on the Empire account), provided that such personnel
               shall be allowed to transfer to job positions within IBM which
               are open to all IBM employees, and which job positions can be
               requested through IBM's standard internal placement system (e.g.,
               positions advertised on the IBM web site or in IBM employment
               newsletters).

          (iii) Software. If Empire is entitled pursuant to this Agreement to a
               license or other rights relating to any Software owned or
               licensed by IBM, IBM shall provide such license or other rights
               to Empire. To the extent that (A) this Agreement requires
               Software that is acquired during the Term to be in Empire's
               name, and (B) IBM fails to procure such Software in Empire's
               name, IBM shall obtain and provide to Empire a license for Empire
               to Use such Software upon termination/expiration of this
               Agreement.

          (iv) Source Code. IBM shall provide source code and artifacts (e.g.,
               documentation, use cases, test scripts, design models, activity
               diagrams, systems configuration) which IBM has in its possession
               or its subcontractors have in their possession for (A) any
               modification or enhancement made hereunder by IBM to Empire
               Software; (B) any software developed pursuant to this Agreement
               which Empire owns or with respect to which Empire is otherwise
               entitled to source code pursuant to Article 7; and (C) as
               otherwise provided in this Agreement. IBM shall provide such
               source code and artifacts as described in the previous sentence
               (I) upon any request from Empire during the Term, and (II) upon
               termination or expiration of this Agreement.

          (v)  Equipment. At Empire's request, IBM shall, at Empire's option:
               (A) assign to Empire or its designee third party leases for some
               or all (as designated by Empire) of the Equipment that was
               primarily (i.e., greater than fifty percent (50%)) used as of the
               date of termination/expiration of this Agreement to provide the
               Services to Empire, and Empire shall assume the obligations under
               such third party leases that relate to periods after such date;
               (B) provide to Empire or its designee leases, on commercially
               reasonable terms, for some or all (as designated by Empire) of
               the Equipment leased by IBM or its Affiliates that was primarily
               (i.e., greater than fifty percent (50%)) used as of the date of
               termination/expiration of this Agreement to provide the Services
               to Empire, and

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               which was financed by IBM internally through its IBM financing
               affiliate; and/or (C) sell to Empire or its designee, at the book
               value for third party Equipment and at the fair market value for
               IBM Logoed Equipment, in each case owned by IBM or its
               Affiliates, some or all (as designated by Empire) of the
               Equipment owned by IBM that was primarily (i.e., greater than
               fifty percent (50%)) used as of the date of
               termination/expiration of this Agreement to provide the Services
               to Empire. In the event of any disagreement between the Parties
               with respect to the fair market value, as provided in the
               previous sentence, the Parties shall split the cost for a
               mutually agreed-to independent third party to establish a fair
               market value for transfer of the asset. IBM shall also provide
               all user and other documentation relevant to the Equipment
               described in this Section 21.10(a)(v) which is in IBM's
               possession. Empire will assume responsibility under any
               maintenance agreements for the Equipment for which Empire elects
               to purchase or assume the lease, to the extent such
               responsibilities relate to periods after the date of
               termination/expiration of this Agreement.

          (vi) Third Party Services and Third Party Service Contracts. IBM shall
               make available to Empire or its designee, pursuant to reasonable
               terms and conditions, any third party services then being
               utilized by IBM to provide the Services to Empire, including
               services being provided through third party service or
               maintenance contracts on Equipment and Software, provided that:

               (A)  with respect to non-Generally Available Software for which
                    IBM has previously obtained rights of assignment in favor of
                    Empire and the right for Empire to receive maintenance for
                    such software upon termination or expiration of this
                    Agreement, as provided in Sections 6.5(c) and 7.3(e)(ii)
                    above, IBM shall comply with the requirements of Section
                    21.10(a)(vi); and

               (B)  with respect to (I) Generally Available Software, and (II)
                    non-Generally Available Software for which IBM attempted but
                    was not previously able to obtain assignment and maintenance
                    rights in favor of Empire, IBM's responsibilities to obtain
                    assignment and maintenance rights as set forth in Section
                    21.10(a)(vi) shall be limited, subject to Sections
                    6.5(c)(iii) and 7.3(e)(ii)(A)(II), to using Commercially
                    Reasonable Efforts to obtain such, provided that such
                    efforts do not include payment of additional fees to such
                    third parties.

               IBM will be entitled to retain the right to utilize any such
               third party services in connection with the performance of
               services for any other IBM customer to which IBM is providing
               such third party services prior to the effective date of
               termination/expiration.

          (vii) Required Consents. Subject to Sections 6.5(c)(iii) and
               7.3(e)(ii)(A)(II), Empire shall be financially responsible, and
               (at Empire's option, except as provided below) IBM shall be
               administratively responsible, for obtaining any Required Consents
               necessary to grant or assign to Empire (and for Empire to have
               the rights with respect to): (A) the Software licenses described
               in Section

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               21.10(a)(iii); (B) the Equipment leases described in Section
               21.10(a)(v)(A); and (C) the third party service and maintenance
               contracts described in Section 21.10(a)(vi), provided however,
               that in the event that an Empire third party vendor shall assume
               responsibility for provision of the Services upon termination or
               expiration of the Agreement, then Empire or its designee shall be
               administratively responsible for obtaining such Required
               Consents.

          (viii) Cost of Termination/Expiration Assistance During the Term. IBM
               shall use Commercially Reasonable Efforts to provide
               Termination/Expiration Assistance utilizing those resources then
               being regularly utilized to perform the Services. If and to the
               extent that the Termination/Expiration Assistance described in
               this Section 21.10(a) requires resources in addition to those
               resources then being regularly utilized in performing the
               Services, Empire will pay IBM for the resources utilized in
               providing such Termination/Expiration Assistance at the personnel
               rates set forth in Schedule C, unless otherwise agreed by the
               Parties.

     (b)  Provision of Services After Termination/Expiration Date. For a period
          of twelve (12) months following the effective date of termination or
          expiration under other provisions of this Agreement (as such effective
          date may be extended pursuant to this Agreement), IBM shall continue
          to provide, at Empire's request, any or all of the Services being
          performed by IBM prior to such effective date, including
          Termination/Expiration Assistance. To the extent IBM is to perform
          Services pursuant to this Section 21.10(b) which were being performed
          prior to the termination/expiration date of this Agreement, the
          provisions of this Agreement shall be applicable, as such provisions
          would have been applicable to the Services prior to the effective date
          of termination or expiration. Charges for such activities that are
          provided without cessation by IBM after termination/expiration of the
          Agreement shall be: (i) for those services for which there is a charge
          in the Agreement, such charges as were in effect immediately prior to
          the termination/expiration date (adjusted by (A) any applicable
          increase/decrease utilizing the ratios set forth in Exhibit 4 to
          Schedule C, and plus (B) any applicable cost of living adjustment
          provided for in Schedule C), and (ii) for those services for which
          there is no charge in the Agreement, at the personnel rates specified
          in Schedule C, as applicable, or at such lower rates as are equitable
          in the circumstances.

     (c)  Cooperation. In the process of evaluating whether to undertake or
          allow termination/expiration or renewal of this Agreement, Empire may
          consider obtaining, or determine to obtain, offers for performance of
          services similar to the Services following termination/expiration of
          this Agreement. As and when reasonably requested by Empire for use in
          such a process, IBM shall provide to Empire such information and other
          cooperation regarding performance of the Services as would be
          reasonably necessary for a third party to prepare an informed,
          non-qualified offer for such services. IBM's support in this respect
          shall include providing information regarding Equipment, Software,
          staffing and other matters described in Schedule I as applicable to
          this Section 21.10(c). Such cooperation shall include, including upon
          any termination in whole or inpart, providing Empire and its designee
          (including third party vendors who shall transition the Services from
          IBM): (i) descriptions of hardware and services configurations, and
          (ii) reasonable access to IBM facilities utilized to provide the
          Services, including the data center, provided however that IBM shall
          not be required to

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          house any such third party personnel at such IBM facilities and
          subject to IBM's generally applicable confidentiality and security
          requirements.

     (d)  Empire or Third Party Performance. As reasonably requested by Empire,
          IBM shall provide Termination/Expiration Assistance in the case of
          Empire's reduction of Services under Section 3.1(e).

22.  COMPLIANCE WITH LAWS

22.1 Compliance with Laws and Regulations Generally.

     (a)  Each Party shall perform its obligations in a manner that complies
          with the applicable federal, state and local laws, regulations,
          ordinances and codes (including identifying and procuring required
          permits, certificates, approvals and inspections) applicable to its
          industry, and IBM shall be responsible for implementation of, and
          shall implement, health care legal and regulatory mandates to the
          extent provided by and directed by Empire (and such implementation may
          be a New Services). If a charge occurs of noncompliance of a Party
          with any such laws, regulations, ordinances or codes, the Party so
          charged shall promptly notify the other Party of such charges in
          writing.

     (b)  If Empire directs IBM to perform the Services in a particular manner
          in order to comply with Empire regulatory requirements, and if IBM
          fails to so perform the Services in such manner, Empire may claim as
          damages, and IBM shall be responsible for, fines, penalties, interest,
          and similar financial obligations levied against Empire for violations
          of such regulatory requirements, if and to the extent resulting from
          IBM's failure, up to a maximum of two hundred and fifty thousand
          dollars ($250,000) in any contract year, which shall be the maximum
          liability of IBM with respect to such damages, fines, penalties,
          interest, and similar financial obligations.

     (c)  If Empire directs IBM to perform the Services in a particular manner
          in order to comply with Empire regulatory requirements, and if IBM so
          complies with such direction, IBM may claim as damages, and Empire
          shall be responsible for, fines, penalties, interest, and similar
          financial obligations levied against IBM for violations of Empire
          regulations, if and to the extent resulting from IBM's compliance with
          Empire's direction, up to a maximum of two hundred and fifty thousand
          dollars ($250,000) in any contract year, which shall be the maximum
          liability of Empire with respect to such damages, fines, penalties,
          interest, and similar financial obligations.

22.2 Gramm-Leach-Bliley Act and Similar Laws.

     Empire and IBM shall comply with all applicable federal, state or local
     laws, and rules and regulations of regulatory agencies, protecting the
     confidential material and privacy rights of Empire, its Affiliates, and/or
     their customers and consumers, including, where applicable, Title V of the
     Gramm-Leach-Bliley Act (15 U.S.C. (S) 6801 et. seq.) and the Economic
     Espionage Act (18 U.S.C. (S) 1831 et. seq.).

22.3 Hazardous Products or Components.

     If any materials to be brought onto Empire's premises by IBM are toxic or
     hazardous under any federal, state or local law or if the material is
     capable of constituting a hazard, then IBM shall be

                                      -97-               Empire/IBM CONFIDENTIAL

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     responsible for complying with all OSHA hazard communication regulations
     for such regulated materials, including (if necessary) notifying Empire in
     writing and supplying an appropriate and complete Material Safety Data
     Sheet to the Empire Contract Executive as well as to the ship-to point. IBM
     shall be responsible to ensure that all materials display all reasonable
     notices and warnings of foreseeable hazards. If the material is classified
     under the requirements of the OSHA Hazard Communication Standard, 29 C.F.R.
     (S) 1910.1200, the name and address of the chemical manufacturer or
     importer or other responsible parties must be marked on the label.
     Appropriate hazard warnings specifying target organs must be on the label.
     If any materials or containers would be or could be classified as hazardous
     or otherwise regulated waste at the end of its useful life, IBM shall
     advise Empire in writing and provide Empire with proper disposal
     instructions, although unless otherwise provided herein, IBM shall be
     responsible for the disposal thereof in compliance with all applicable laws
     and regulations.

22.4 Equal Employment Commitments.

     During the Term, IBM shall comply with the "Equal Employment Commitments --
     Medicare" attached in Schedule O-1. Upon execution of this Agreement, IBM
     shall have contemporaneously executed the "Equal Employment Commitments --
     Non-Medicare" attached in Schedule O-2, and IBM shall comply with the
     requirements therein during the Term.

23.  GENERAL

23.1 Binding Nature and Assignment.

     (a)  This Agreement shall be binding on the Parties hereto and their
          respective successors and assigns. Neither Party may, or shall have
          the power to, assign this Agreement without the prior written consent
          of the other, except that Empire may assign its rights and obligations
          under this Agreement without the approval of IBM (i) to an entity
          which acquires all or substantially all of the assets of Empire or
          (ii) to any subsidiary or Affiliate or successor in a merger,
          acquisition, restructuring or reorganization of Empire; provided that
          in no event shall such assignment relieve Empire of its obligations
          under this Agreement.

     (b)  IBM further acknowledges that Empire is contemplating as of the
          Effective Date a corporate reorganization and that in connection with
          such reorganization, Empire may assign its rights and obligations as
          contemplated in Section 23.1(a)(i) and (ii) above to an Affiliate,
          without IBM's prior written consent, and the proviso in the preceding
          paragraph shall be inapplicable to such assignment; provided that such
          Affiliate owns, directly or indirectly, the successor or equivalent
          organization to Empire, its securities are publicly traded, and it
          meets the minimum market capitalization requirements for listing on
          the New York Stock Exchange. Without limiting the generality of the
          foregoing, Empire may, without the approval of IBM, undertake any
          transactions necessary with respect to an initial public offering of
          Empire.

     (c)  Subject to the foregoing, any assignment by operation of law, order of
          any court, or pursuant to any plan of merger, consolidation or
          liquidation, shall be deemed an assignment for which prior consent is
          required. Any assignment made without Empire's consent as required
          above shall be null and void and of no effect as between the Parties.

                                      -98-               Empire/IBM CONFIDENTIAL

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23.2 Entire Agreement; Amendment.

     This Agreement, including any Schedules referred to herein and attached
     hereto, each of which is incorporated herein for all purposes, constitutes
     the entire agreement between the Parties with respect to the subject matter
     contained in this Agreement and supersedes all prior agreements, whether
     written or oral, with respect to such subject matter. No change, waiver, or
     discharge hereof shall be valid unless in writing and signed by an
     authorized representative of the Party against which such change, waiver or
     discharge is sought to be enforced.

23.3 Mutually Negotiated.

     Each Party acknowledges that the terms and conditions of this Agreement
     (including any perceived ambiguity herein) shall not be construed in favor
     of or against any Party by reason of the extent to which any Party or its
     professional advisors participated in the preparation of the original or
     any further drafts of this Agreement, as each Party has been represented by
     counsel in its negotiation of this agreement and it represents their mutual
     efforts.

23.4 Notices.

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

          In the case of Empire:   Empire Blue Cross Blue Shield
                                   11 W. 42nd Street
                                   New York, New York 10036
                                   Attention: Kenneth Klepper

          With a copy to:          Empire Blue Cross Blue Shield
                                   11 W. 42nd Street
                                   New York, New York 10036
                                   Attention: General Counsel

          And with a copy to:      Shaw Pittman
                                   2300 N Street, NW
                                   Washington, DC 20037
                                   Attention: Joseph E. Kendall, Esq.

          In the case of IBM:      IBM Project Executive
                                   c/o Empire Blue Cross Blue Shield
                                   11 W. 42nd Street
                                   New York, New York 10036

          With a copy to:          IBM Global Services
                                   Route 100
                                   Somers, New York 10589

                                      -99-               Empire/IBM CONFIDENTIAL

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                           Attention: General Counsel

     A Party may from time to time change its address or designee for
     notification purposes by giving the other prior written notice of the new
     address or designee and the date upon which it will become effective. In
     addition to the foregoing, notices for breach, suspension of Services and
     termination of Services shall be sent by certified mail.

23.5 Counterparts.

     This Agreement may be executed in several counterparts, all of which taken
     together shall constitute one single agreement between the Parties.

23.6 Headings.

     The article and section headings and the table of contents used in this
     Agreement are for reference and convenience only and shall not enter into
     the interpretation of this Agreement.

23.7 Relationship of Parties.

     IBM, in furnishing the Services, is acting as an independent contractor,
     and as between the Parties, IBM has the sole right and obligation to
     supervise, manage, contract, direct, procure, perform or cause to be
     performed, all work to be performed by IBM under this Agreement. No
     contract of agency and no joint venture is intended to be created hereby.
     IBM is not an agent of Empire and has no authority to represent Empire as
     to any matters, except as expressly authorized in this Agreement. None of
     IBM's employees shall be deemed employees of Empire, and as between the
     Parties, IBM shall be responsible for reporting and payment of all wages,
     unemployment, social security and other payroll taxes, including
     contributions from them when required by law. Empire does not and shall not
     have actual, potential or any other control over IBM or its employees.

23.8 Severability.

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

23.9 Consents and Approval.

     Except where expressly provided as being in the discretion of a Party,
     where approval, acceptance, consent or similar action by either Party is
     required under this Agreement, such action shall not be unreasonably
     delayed or withheld. An approval or consent given by a Party under this
     Agreement shall not relieve the other Party from responsibility for
     complying with the requirements of this Agreement, nor shall it be
     construed as a waiver of any rights under this Agreement, except as and to
     the extent otherwise expressly provided in such approval or consent.
     Empire's representatives may not be fully familiar with, or necessarily
     insist at all times on the full and complete performance with, the terms of
     the Agreement. Empire's failure to insist in any one or more instances upon
     strict performance of any provision of the Agreement, or failure or delay
     to take advantage of any of its rights or remedies hereunder, or failure to
     notify IBM of

                                     -100-               Empire/IBM CONFIDENTIAL

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     any breach, violation, or default, shall not be construed as a waiver or
     construction by Empire of any such performance, provision, rights, breach,
     violation, or default either then or in the future or the relinquishment of
     any of its rights and remedies. Each Party shall, at the request of the
     other Party, perform those actions, including executing additional
     documents and instruments, reasonably necessary to give full effect to the
     terms of this Agreement.

23.10 Waiver of Default; Cumulative Remedies.

     (a)  A delay or omission by either Party to exercise any right or power
          under this Agreement shall not be construed to be a waiver thereof. A
          waiver by either of the Parties of any of the covenants to be
          performed by the other or any breach thereof shall not be construed to
          be a waiver of any succeeding breach thereof or of any other covenant
          herein contained.

     (b)  Except as otherwise expressly provided herein, 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 or in
          equity.

23.11 Survival.

     Any provision of this Agreement which contemplates performance or
     observance subsequent to termination or expiration of this Agreement shall
     survive termination or expiration of this Agreement and continue in full
     force and effect.

23.12 Public Disclosures.

     All media releases, public announcements and public disclosures by either
     Party relating to this Agreement or the subject matter of this Agreement,
     including promotional or marketing material, but not including
     announcements intended solely for internal distribution or disclosures to
     the extent required to meet legal or regulatory requirements beyond the
     reasonable control of the disclosing Party, shall be coordinated with and
     approved by the other Party prior to release. Notwithstanding the
     foregoing, IBM may list Empire as a customer and describe in general terms
     the services provided by IBM under this Agreement in proposals and other
     marketing materials.

23.13 Service Marks.

     Neither Party shall, without the other Party's prior written consent, use
     the name, service marks or trademarks of the other Party or, with regard to
     IBM, those of the Blue Cross and Blue Shield Association, an association of
     independent Blue Cross and Blue Shield plans.

23.14 Third Party Beneficiaries.

     This Agreement is entered into solely between, and may be enforced only by,
     Empire and IBM, and this Agreement shall not be deemed to create any rights
     in third parties, including suppliers and customers of a Party, or to
     create any obligations of a Party to any such third parties.

23.15 Nonsolicitation of Employees.

     Subject to Section 21.10(a)(ii), during the Term of the Agreement: (a)
     Empire shall neither solicit, directly or indirectly, nor hire IBM's
     employees engaged in the provision of the Services,

                                     -101-               Empire/IBM CONFIDENTIAL

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     during the period they are so engaged and for nine (9) months thereafter,
     without the prior written consent of IBM, and (b) IBM shall neither
     solicit, directly or indirectly, nor hire Empire's employees and
     consultants, during the period they are so engaged and for nine (9) months
     thereafter, without the prior written consent of Empire, provided however
     that item (b) shall not restrict IBM's ability to hire Affected Employees
     within the first year of the Term. The Parties acknowledge that the
     restrictions provided in Sections 23.15(a)-(b) shall not apply with respect
     to solicitation by IBM employees and Empire employees and consultants that
     are not directly or indirectly involved in the day-to-day operations of the
     Empire environment.

23.16 Intentionally Left Blank.

23.17 Intentionally Left Blank.

23.18 Covenant of Good Faith.

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

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

EMPIRE HEALTHCHOICE, INC.                  INTERNATIONAL BUSINESS MACHINES

By: /s/ Michael A. Stocker                 By:   /s/ Robert J. Dudek
    -----------------------------------         --------------------------------

Title:  Chief Executive Officer           Title:   Senior Client Executive
       --------------------------------           ------------------------------

                                     -102-               Empire/IBM CONFIDENTIAL

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