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ANNEX F
SERVICE AGREEMENT
Between
UNICARE LIFE & HEALTH INSURANCE COMPANY
and
XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY
Dated as of January [ ], 1997
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TABLE OF CONTENTS
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1. Definitions....................................................... 1
2. Description of Services and Performance Standards................. 1
2.1 Description of Services.............................. 1
2.2 Performance Standards................................ 2
2.3 Engagement of Transition Consultants................. 2
3. Facilities and Personnel.......................................... 2
3.1 Facilities and Trained Personnel..................... 2
3.2 Status of Employees and Facilities................... 2
3.3 Control.............................................. 2
4. Fees and Reimbursements........................................... 2
5. Payment........................................................... 3
6. Accounting Records and Documents.................................. 3
6.1 Maintenance of Records............................... 3
6.2 Inspection and Audit Rights.......................... 3
7. Other Records and Documents....................................... 3
8. Cooperation....................................................... 4
9. Authorized Representatives........................................ 4
10. Nonexclusive Services............................................. 4
11. Indemnification................................................... 4
11.1 The Service Provider................................. 4
11.2 The Company.......................................... 4
11.3 Indemnification Procedures........................... 4
12. Term and Termination Rights....................................... 5
12.1 Term................................................. 5
12.2 Event of Default..................................... 5
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12.3 Remedies upon Occurrence of Event of Default......... 6
12.4 Termination Upon Termination of Administration
Agreement.......................................... 6
13. Effect of Termination or Expiration of Agreement.................. 6
13.1 Transition........................................... 6
13.2 Transfer of Information upon Termination of Services. 6
13.3 Payment of Amounts Due............................... 6
13.4 Reinsurance Agreements............................... 6
14. Confidentiality................................................... 6
15. Miscellaneous..................................................... 7
15.1 Waiver............................................... 7
15.2 Conflict with Law.................................... 7
15.3 Assignment........................................... 7
15.4 Binding on Successors and Assigns.................... 7
15.5 No Third Party Beneficiaries......................... 7
15.6 Independent Contractor............................... 7
15.7 Arbitration.......................................... 7
15.8 Notice............................................... 7
15.9 Entire Agreement..................................... 9
15.10 Amendments........................................... 9
15.11 Survival............................................. 9
15.12 Severability......................................... 9
15.13 Interpretation....................................... 9
15.14 Headings............................................. 9
15.15 Counterparts......................................... 9
15.16 Governing Law........................................ 9
Appendices
Appendix A Administrative and Support Service Fees............ X-0
Xxxxxxxx X Financial and Reporting Services................... A-4
Appendix C Computer Support................................... A-6
Schedule of Attachments to Appendix C........................... X-00
Xxxxxxxxxx 0 Xxxxxxxx xx Xxxxxxxxx Applications................ X-00
Xxxxxxxxxx 0 Xxxxxxxx xx Xxxxxxxxx Tools....................... A-15
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Attachment 3 GBO Business Requirements for Service Provider ITS
Services.................................. A-18
Attachment 4 Overview of Service Provider's Techline Services... A-23
Appendix D Graphic Services................................... A-24
Appendix E Office Services.................................... A-25
Appendix F Output Services.................................... A-28
Appendix G Dining and Conference Center Services.............. A-29
Appendix H Childcare Center................................... A-30
Appendix I Legal Services..................................... A-31
Appendix J Tax Services....................................... A-32
Appendix K Treasury Services.................................. A-33
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SERVICE AGREEMENT
THIS SERVICE AGREEMENT (this "Agreement") dated as of January [ ],
1997, by and between Xxxx Xxxxxxx Mutual Life Insurance Company, a Massachusetts
corporation with offices at 000 Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
("Service Provider"), and UniCARE Life & Health Insurance Company, a Delaware
corporation with offices at 00000 Xxxxxx Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx
00000 ("Company").
W I T N E S S E T H:
WHEREAS, Service Provider and Wellpoint Health Networks, Inc., a
California Corporation ("Wellpoint") and the indirect parent of the Company,
have entered into a Purchase and Sale Agreement (the "Purchase Agreement")
pursuant to which Service Provider is selling and Wellpoint and the Company are
acquiring the GBO Included Business (as defined in the Purchase Agreement) of
Service Provider; and
WHEREAS, the Purchase Agreement requires that, as a condition to
closing under the Purchase Agreement, the Service Provider and Company enter
into this Agreement under which Service Provider will provide to Company certain
administrative services relating to the conduct of the GBO Included Business for
an interim period after closing on the terms and conditions set forth in this
Agreement; and
WHEREAS, Company desires Service Provider to perform such
administrative services for Company, and Company desires to receive such
services from Service Provider, on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the covenants and of the mutual
promises set forth herein, Service Provider and Company agree as follows:
1. Definitions. Terms not defined herein shall have the
meanings ascribed to them in the Purchase Agreement.
2. Description of Services and Performance Standards.
2.1 Description of Services. Subject to the terms and
conditions and limitations of this Agreement, Service Provider agrees to perform
the administrative services for Company described in Appendices A through K
annexed hereto (collectively, the "Services"). If Company desires to receive
from Service Provider additional services which are not otherwise contemplated
under this Agreement, the parties shall negotiate in good faith to reach a
mutually acceptable arrangement with respect to the provision of such services.
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2.2 Performance Standards. Service Provider agrees that in
providing Services under this Agreement it shall: (i) conduct itself in
accordance with all reasonable commercial and professional standards of care,
diligence and good faith which are substantially equal in quality to the
standards Service Provider applied prior to the Effective Time, provided that
such standards are not inconsistent with prudent management practices in the
life and health insurance industry generally, and shall generally act in such a
way as to preserve goodwill toward Company on the part of the general public,
customers, and all those having business relations with Company, (ii) comply
with all material laws, regulations and orders applicable to Service Provider
with respect to the Services and to the conduct of the activities contemplated
hereby and (iii) with respect to the Services carry on its affairs in the
ordinary course of business and not make or institute any unusual method of
doing business, GAAP or SAP accounting or operation. Notwithstanding the
foregoing, the failure of the Service Provider to provide such Services in
accordance with the standards set forth above, to the extent due to the failure
of the Company to provide information or services to Service Provider as
required under the Transaction Documents, shall not be deemed to be a breach of
this Agreement.
2.3 Engagement of Transition Consultants. Service Provider
agrees to engage transition consultants on behalf of Company or Wellpoint and as
designated by Company or Wellpoint and to pay invoices received for fees and
disbursements from such consultants for amounts up to $3,000,000.
3. Facilities and Personnel.
3.1 Facilities and Trained Personnel. Service Provider will at
all times maintain sufficient facilities and trained personnel of the kind
necessary to perform this Agreement in accordance with the performance
standards.
3.2 Status of Employees and Facilities. Whenever Service
Provider utilizes its employees to perform Services for Company pursuant to this
Agreement, such employees shall at all times remain subject to the direction and
control of Service Provider, and Company shall have no liability to such Persons
for their welfare, salaries, fringe benefits, legally required employer
contributions and tax obligations by virtue of the relationships established
under this Agreement. No facility of Service Provider used in performing the
Services for or subject to use by Company shall be deemed to be transferred,
assigned, conveyed or leased by such performance or use. Service Provider shall
maintain appropriate security, maintenance and insurance coverage on such
facility.
3.3 Control. The performance of the Services by Service
Provider for Company pursuant to this Agreement shall in no way impair the
absolute control of the business and operations of Service Provider or Company
by their respective Boards of Directors.
4. Fees and Reimbursements. In consideration for the
performance of the Services by Service Provider, Company shall pay to Service
Provider administrative fees in the amounts and at the times set forth on
Appendix A. In the event that Company relocates the principal office at which
the GBO Included Business is conducted from 000 Xxxxxxxx Xxxxxx,
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Xxxxxx, Xxxxxxxxxxxxx, Company will reimburse Service Provider for any
incremental costs which are incurred and documented by Service Provider in
providing Services to Company at the new location.
5. Payment. Service Provider shall submit to Company within 10
Business Days after the end of each month a written statement of the amount owed
by Company for fees and reimbursements pursuant to Section 4 of this Agreement
for that month, and Company shall pay to Service Provider within 30 Business
Days following receipt of such written statement, the amount set forth in the
statement. Any amount owed by Company to Service Provider that is paid after the
due date therefor shall bear interest at the interest rate for 30 day United
States Treasury bills as reported in the Wall Street Journal as of the day on
which any payment is due, from the due date through the date of payment.
6. Accounting Records and Documents.
6.1 Maintenance of Records. Service Provider shall be
responsible for maintaining full and accurate accounts and records of all
Services rendered pursuant to this Agreement and such additional information as
Company may reasonably request for purposes of its internal bookkeeping,
accounting, operations and management. Service Provider shall keep such accounts
and records available, during all reasonable business hours during the term of
this Agreement, at its principal offices, or at such other location as required
by applicable state laws and regulations or by state regulatory authorities, for
audit, inspection and copying by Company and Persons authorized by it or any
governmental agency having jurisdiction over Company. With respect to accounting
and statistical records prepared by or for Service Provider by reason of its
performance under this Agreement, summaries of such records in a form acceptable
to both Service Provider and Company shall be delivered to Company within 15
days from the end of the period to which the records pertain.
6.2 Inspection and Audit Rights. In addition to rights granted
under Section 7 below, at any time during the term of this Agreement, and for a
period of 2 years after termination or expiration of this Agreement, Company, or
its authorized independent auditors or counsel, shall have the right to inspect
and audit Service Provider's premises and facilities, accounts, books and
records relating to the Services upon 15 Business Days' prior written notice
during Service Provider's regular business hours.
7. Other Records and Documents. All books, records and files
established and maintained by Service Provider by reason of its performance
under this Agreement shall be the property of Service Provider, and shall be
subject to examination at all times during the term of this Agreement upon 15
Business Days' prior written notice during Service Provider's regular business
hours by Company and Persons authorized by it or any governmental agency having
jurisdiction over Company. Company shall have the right, at its expense, to
receive duplicate copies of any records retained by Service Provider within 15
days after any request by Company or originals of such records (with Service
Provider retaining copies thereof) if required by law. Company shall be
responsible for payment of all documented costs of copying and mailing or
otherwise transporting any documentation as required under this Section 7.
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8. Cooperation. The parties agree to cooperate with each other
in a commercially reasonable manner in order that the duties assumed by the
parties under this Agreement may be effectively, efficiently and promptly
discharged. Each party shall at all reasonable times during normal business
hours under the circumstances make available to the other party properly
authorized personnel for the purpose of consultation and decision.
9. Authorized Representatives. Service Provider and Company
each shall from time to time appoint one or more individuals who shall serve as
authorized representative(s) of such party for the purposes of carrying out this
Agreement. Such Persons shall be authorized to act on behalf of their respective
parties as to matters pertaining to this Agreement. Each party shall notify the
other, in writing, as to the name, address, and telephone number for any such
authorized representative, and of any replacement thereof.
10. Nonexclusive Services. Company acknowledges and agrees
that Service Provider shall have the right to provide services to other third
parties.
11. Indemnification.
11.1 The Service Provider. The Service Provider hereby agrees
on demand to indemnify and hold harmless the Company and its Affiliates, and
their respective directors, officers and employees (each, an "Indemnified
Party") from and against any and all demands, actions, proceedings, suits (by
any Person, entity or group, including, without limitation, any Governmental
Entity) and Liabilities, paid or incurred (including reasonable attorneys' fees)
resulting from or arising out of (i) the breach of or failure to perform any of
the duties, obligations, covenants or agreements of the Service Provider
contained in this Agreement, (ii) any claims made against any Indemnified Party
by any Person to the extent relating to the Service Provider's performance of,
or failure to perform, the terms of this Agreement, and (iii) the Service
Provider's failure to comply with all laws, regulations and orders applicable to
the Company with respect to the Services provided under this Agreement.
11.2 The Company. The Company hereby agrees on demand to
indemnify and hold harmless the Service Provider and its Affiliates, and their
respective officers, directors and employees from and against any and all
demands, actions, proceedings, suits (by any Person, entity or group, including,
without limitation, any Governmental Entity) and Liabilities, paid or incurred
(including reasonable attorney's fees), resulting from or arising out of the
breach of or failure to perform any of the duties, obligations, covenants or
agreements of the Company contained in this Agreement.
11.3 Indemnification Procedures. Indemnification under Section
11.1 and 11.2 shall be made using the procedures, terms and conditions contained
in Sections 14.2 and 14.3 of the Purchase Agreement as if fully set forth
herein, with (i) with references in Section 14.2(a) to "indemnification under
Section 14.1 of this Agreement" changed to refer to "indemnification under
Section 11.1 or 11.2, as the case may be, of this Agreement", (ii) the phrase
"except as provided in Section 14.1 (g) and" deleted in Section 14.2(c), (iii)
references in Section 14.3 to "this Article XIV" shall be changed to refer to
"this Section 11.1" or "this Section 11.2", as the
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case may be, and (iv) the phrases "and, in any event, within the time period
referred to in Section 14.1(g)" and "So long as Indemnitee provides the
Indemnity Notice within the time period referred to in Section 14.1(g)," deleted
from the text of Section 14.3.
12. Term and Termination Rights.
12.1 Term. This Agreement will commence on the date hereof and
will continue in effect for a period of 2 years from such date, unless earlier
terminated pursuant to Sections 12.3 or 12.4 below; provided, however, that in
the event that Company relocates the principal office at which the GBO Included
Business is conducted from 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, the
Services described in Appendices G and H will terminate; and provided, further,
that Company shall have the right to terminate this Agreement on a service by
service basis at any time without an Event of Default having occurred, upon 30
days' prior written notice to Service Provider and payment of all fees and other
amounts due to Service Provider through the date of termination of such
Services.
12.2 Event of Default. Any one or more of the following shall
constitute an Event of Default as to a party hereunder:
(a) It fails to pay any amount when due to the other
party under this Agreement; or
(b) It fails to perform or observe any other
covenant, term or condition contained in this Agreement, including, but not
limited to, breach of performance requirements, and such failure or breach shall
not have been cured within 30 days after notice by the non-defaulting party of
such failure or breach; provided, however, that if the defaulting party
reasonably believes that the failure or breach is not curable within such 30-day
period, the defaulting party may send written notice to the non-defaulting party
prior to the expiration of such 30-day period setting forth the anticipated time
it believes would be necessary to cure, and the action proposed to effectively
cure, such failure or breach, and such failure or breach shall not constitute an
Event of Default if the defaulting party shall thereafter diligently prosecute
and effect a cure; or
(c) If it shall (i) commence a voluntary case or
other proceeding seeking liquidation, rehabilitation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency,
rehabilitation or other similar law now or hereafter in effect that authorizes
the reorganization, rehabilitation or liquidation of such party or its debt or
the appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or (ii) consent to any
such relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or (iii) make a
general assignment for the benefit of creditors, or (iv) fail generally to pay
its debts as they became due, or (v) take any corporate action to authorize any
of the foregoing; or
(d) An involuntary case or other proceeding shall be
commenced against it seeking liquidation, rehabilitation, reorganization or
other relief with respect to it or its
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debts under any bankruptcy, rehabilitation, insolvency or other similar law now
or hereafter in effect seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or
(e) An order is entered by a court of competent
jurisdiction affecting substantially all of its property or affairs under
bankruptcy, rehabilitation, insolvency or other similar laws as now or hereafter
in effect and such order shall remain undismissed and unstayed for a period of
60 days.
12.3 Remedies upon Occurrence of Event of Default. Upon the
occurrence of an Event of Default as described in Section 12.2 above, the
non-defaulting party may, at its option, terminate this Agreement by giving
written notice of its intention to terminate this Agreement.
12.4 Termination Upon Termination of Administration
Agreement. In addition to any other right to terminate this Agreement, either
party shall have the right, without an Event of Default hereunder having
occurred, to terminate this Agreement upon notice at or after the termination of
the Administration Agreement.
13. Effect of Termination or Expiration of Agreement.
13.1 Transition. If this Agreement is terminated by Company
following an Event of Default by Service Provider, then Service Provider agrees
to take action reasonably requested by Company, and will reasonably cooperate
with Company, to facilitate the transition of the Services to another service
provider selected by Company or to Company.
13.2 Transfer of Information upon Termination of Services.
Upon termination of this Agreement, or any Service under this Agreement, at
Company's option and request, Service Provider shall promptly transfer all
Company information relating to the Services terminated (including but not
limited to, financial and technical information and data), in its existing
format, to Company or a party designated by Company. Such transfer shall be made
at Service Provider's expense, except that Company will reimburse Service
Provider for reasonable out-of-pocket expenses incurred by Service Provider and
agreed to in advance by Company in connection with such transfer.
13.3 Payment of Amounts Due. No termination of this Agreement,
however effected, shall relieve either party of its obligations to pay any
amounts which then may be due or may thereafter become due as provided in this
Agreement.
13.4 Reinsurance Agreements. Nothing in Section 12 or this
Section 13 shall affect any co-insurance or reinsurance agreement between the
parties.
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14. Confidentiality. This Agreement and the information
provided hereunder shall be subject to the confidentiality provisions of Section
16.1 of the Purchase and Sale Agreement.
15. Miscellaneous.
15.1 Waiver. The failure of Service Provider or Company to
insist on strict compliance with this Agreement, or to exercise any right or
remedy under this Agreement, shall not constitute a waiver of any rights
provided under this Agreement, nor estop the parties from thereafter demanding
full and complete compliance nor prevent the parties from exercising such a
right or remedy in the future.
15.2 Conflict with Law. If any provision of this Agreement
should be declared invalid by a court of general jurisdiction and superseded by
specific law or regulation, such law or regulation shall control to the extent
of such conflict without affecting the remaining provisions of this Agreement.
15.3 Assignment. Either party shall have the right to assign
any or all of its rights or obligations under this Agreement to a third party
with the other party's prior written consent, which will not be unreasonably
withheld; provided, however, that the assigning party shall, notwithstanding
such assignment, remain primarily liable to the other party for performance by
the assignee of its obligations to the other party hereunder.
15.4 Binding on Successors and Assigns. The provisions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns.
15.5 No Third Party Beneficiaries. Except as and to the extent
specifically provided in this Agreement, nothing in this Agreement, expressed or
implied, is intended to confer on any Person other than the parties hereto, or
their respective legal successors or permitted assigns, any benefits or
remedies.
15.6 Independent Contractor. Nothing contained in this
Agreement shall be construed to create the relationship of joint venture or
partnership between Service Provider and Company. Service Provider is an
independent contractor and shall be free, subject to the terms and conditions of
this Agreement, to exercise judgment and discretion with regard to the conduct
of business.
15.7 Arbitration. Any dispute or difference between the
parties with respect to the operation or interpretation of or arising from or
relating to, this Service Agreement on which an amicable understanding cannot be
reached shall be decided by binding arbitration. Arbitration hereunder shall be
pursuant to and in accordance with the terms, conditions and procedures set
forth in Article XV of the Purchase Agreement.
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15.8 Notice. Any notice or other communication in connection
with this Agreement shall be in writing and shall be deemed to be delivered if
(i) actually delivered to the following address, (ii) sent by telecopy to the
following telecopy number and a transmission confirmation is received or (iii)
sent by certified United States mail, postage prepaid, return receipt requested
to the following address and 5 Business Days lapse after deposit in the mail:
If to the Service Provider: Xxxx Xxxxxxx Mutual Life Insurance Company
000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Chief
Financial Officer
Telephone: (000) 000-0000
Telecopier No.: (000) 000-0000
With copies to: Xxxx Xxxxxxx Mutual Life Insurance
Company
000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq., Vice
President and Counsel
Telephone: (000) 000-0000
Telecopier No.: (000) 000-0000
Xxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier No.: (000) 000-0000
If to the Company: UniCARE Life & Health Insurance Company
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Chairman
and Chief Executive Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With copies to: UniCARE Life & Health Insurance Company
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq., General
Counsel
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Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or to such other name(s) or to such other address(es) or telecopier number(s) as
a party may designate from time to time to the other party by written notice.
15.9 Entire Agreement. This Agreement (including the
Appendices attached hereto), the Purchase Agreement, and the other agreements
referred to therein, constitute the entire agreement and understanding between
the parties, and supersede all prior agreements, whether oral or written,
between the parties with respect to the subject matter hereof and thereof.
15.10 Amendments. This Agreement may be amended, altered or
modified, and any of the terms or conditions hereof may be waived, only by a
written instrument signed by both parties, or in the case of a waiver, by the
party waiving compliance.
15.11 Survival. Upon the expiration or termination of this
Agreement for any reason whatsoever, the obligations set forth in Section 6.2
(Inspection and Audit Rights), Section 7 (Other Records and Documents), Section
11 (Indemnification), Section 13 (Effect of Termination or Expiration of
Agreement), Section 14 (Confidentiality), and Section 15 (Arbitration) shall
survive such termination.
15.12 Severability. The invalidity or unenforceability of any
term or provision hereof shall not affect the validity or enforceability of any
other term or provision hereof.
15.13 Interpretation. No provision of this Agreement shall be
construed against any party on the ground that such party drafted the provision
or caused it to be drafted.
15.14 Headings. The headings preceding the text of the
articles and paragraphs of this Agreement are inserted solely for the
convenience of reference and shall not affect the meaning, construction or
effect of this Agreement.
15.15 Counterparts. This Agreement may be executed in
separate counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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15.16 Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware applicable to
contracts made and to be performed in that State, without regard to conflicts of
laws principles.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed in duplicate by their respective officers duly authorized so to do,
and their respective corporate seals to be affixed hereto, as of the date and
year first above written.
XXXX XXXXXXX MUTUAL LIFE INSURANCE
COMPANY
By:_____________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
UNICARE LIFE & HEALTH INSURANCE
COMPANY
By:_____________________________________
Name: D. Xxxx Xxxxxxxx
Title: President
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APPENDIX A
ADMINISTRATIVE AND SUPPORT SERVICE FEES
Throughout these Appendices the term "Buyer" shall mean Unicare Life and Health
Insurance Company and its affiliates. The term "Seller" shall mean Xxxx Xxxxxxx
Mutual Life Insurance Company and its affiliates. The fees to be charged for the
services performed under this Agreement will be as follows. Unless otherwise
specified, all charges will increase 3% annually on January 1, beginning January
1, 1998. Except as otherwise specified herein or in the Agreement, fixed costs,
where shown, are subject to change on a quarterly basis if services and/or
volumes of activity change materially. The provisions of Section 8.8 of the
Purchase Agreement are independent of, and are not superceded by, this Service
Agreement and shall survive the Closing.
Financial Accounting and Reporting Services (Appendix B)
$16,500 per month for services included in items 0-00 xx Xxxxxxxx X
$2,100 per quarter for services included in item 1 of Appendix B
$16,000 payable on January 30, 1997 for preparing Seller's general ledger
system for required financial accounting and reporting services.
$50 per hour for consulting and/or support services considered to be
extraordinary, to be charged only with prior agreement of Buyer.
Actual cost for vendor data entry charges, printing charges for statutory
statement, on line queries, filing fees and other out-of-pocket
expenses
Computer Support (Appendix C)
No Fees for services included in Appendix C,
other than Voice Communications, for the
first nine months of the term of the
Service Agreement
$700,000 for services included in Appendix C, other than Voice
Communications, for the tenth month of the term of the Service
Agreement
$1,300,000 for services included in Appendix C, other than Voice
Communications, for the eleventh month of the term of the
Service Agreement
$1,600,000 for services included in Appendix C other than Voice
Communications for the twelfth month of the term of the Service
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Agreement with such fees increasing at a rate of 3% per annum
each month thereafter
$22.50 per month per extension for common equipment and extension
availability
Standard Seller rates per month per telephone set
$2 per month per voice mailbox
Actual Cost for long distance and local outbound calls
Actual Cost for inbound 800 number calls
$2,300 per month for 800 number availability
$65 per hour for consulting and/or support services considered to be
extraordinary, to be charged only with prior agreement of Buyer
Graphic Services (Appendix D)
Standard Seller Rates Charges will be on a per job basis with the cost of each job
quoted in advance if requested.
Office Services (Appendix E)
$5000 per month for records management for active files and check
look-ups
Actual costs for inactive records management by vendor per month for receipt
$8000 and distribution of incoming mail and materials
$10,000 per month for manual handling and consolidation of outgoing
non-automated mail
Actual costs for all postage charges
$0.02205 per piece for inserting automated mail
$0.01 per piece for sorting automated mail
$55 per hour for special purchasing services requested, to be charged
only with prior agreement of Buyer
$21 per hour for addressing and labeling services requested
Actual cost for any business research services provided via a vendor, such
as database searches
Output Services (Appendix F)
$130,000 per month for all Output Services
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Dining and Conference Center Services (Appendix G)
$18,000 per month for employee access to and use of JH dining facilities
Standard Seller rates for requested catering services, with quotes provided in advance
if requested.
$95 per guest room per day at the JH Conference Center
Standard Seller rates for JH Conference Center conference room usage, with quotes
provided in advance if requested.
Childcare Center (Appendix H)
$635 per month per child for use of JH Childcare Center
Legal Services (Appendix I)
$141 per hour for attorney time
$76 per hour for paralegal time
Tax Services (Appendix J)
$70 per hour for tax consultation
Treasury Services (Appendix K)
$1800 per month for Treasury Services included in Appendix K
Actual cost for banking service charges
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00
XXXXXXXX X
FINANCIAL AND REPORTING SERVICES
Provide all necessary and appropriate general financial accounting and reporting
services, including the following:
1. The quarterly preparation of all books of account and other records
necessary to reflect and report the financial condition of the GBO
business which was transferred from Seller and its subsidiaries,
jointly referenced hereafter as the GBO Business, as required by
various state and governmental and regulatory authorities.
2. The monthly preparation of information pertinent to the operation of
the GBO Business and access to the general ledger, bank reconciliation
system, abandoned property system and fixed asset system, provided that
all such books of account and records shall at all times be the
property of Seller and shall be surrendered to Seller on request.
Further information will include but is not limited to:
a. Audited GAAP Financial Statements as of 12/31/96 (or
such other closing date as applicable);
b. Statutory adjustments as of 12/31/96 (or such other
closing date as applicable) and quarterly adjustments
thereafter;
c. Monthly close with general ledger file feed and
printed copy;
d. Escheat amounts semi-annually;
e. Premium taxes quarterly;
f. Monthly estimates for amounts due under the Services
Agreement
g. Fees and licenses;
h. Ability to book to Seller's general ledger
i. Monthly financial statements, including a trial
balance
j. Support in reporting and analyzing monthly
statements.
3. The coordination and support of audits by outside accountants
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4. The audit of travel expenses of the GBO business to ensure compliance
with Seller's travel policies and the reporting of all travel expenses,
if required.
5. The reconciliation of Seller's various checking accounts to the
appropriate financial records.
6. The funding of the GBO Business field office Working Balance Accounts
(Imprest Funds) and the reporting of all related expenses to be
reimbursed by Buyer to Seller;
7. Compliance with all state abandoned property and escheat filing
requirements including searching for and contacting claimants and
policyholders to replace uncashed checks for all checks written on
behalf of the GBO Business by Seller out of accounts owned or
controlled by Seller;
8. The maintenance of fixed asset records to support GBO assets formerly
owned by Seller and associated depreciation and a computer file
containing detailed asset records in a format acceptable by the Buyer's
fixed asset system. These records will include assets owned by Seller
prior to the sale as well as assets purchased by Seller on behalf of
the GBO Business subsequent to the sale date. This will also include a
monthly report detailing new capital acquisitions.
9. GAAP basis income statement, balance sheet and statements of cash flows
for 1994, 1995 and 1996 for the GBO Business, as of 12/31 for each year
and quarterly statements for 1994, 1995 and 1996. Also, Statutory
financial statements for years 1995 and 1996.
10. For Canadian business of the GBO Business, financial information detail
and support for quarterly and year-end reporting.
11. Ability by Buyer's internal auditors, or their designees, to audit
certain procedures which are performed by Seller on behalf of Buyer as
part of the Services Agreement. Adequate notice of the intent to audit
will be provided by Buyer.
12. Other consultative services as required.
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APPENDIX C
COMPUTER SUPPORT
This Appendix C sets forth the computer support services (the "Services") that
Seller will provide to the GBO Business which will be transferred to Buyer
(hereinafter "GBO.")
1.0 DIGITAL ENVIRONMENT
1.1 HARDWARE. The computer equipment and peripherals will be
housed in Seller's data center at its corporate offices in
Boston, Massachusetts. Said equipment and peripherals will not
be dedicated exclusively to running GBO's applications.
1.2 SOFTWARE. Seller will obtain the necessary licenses from the
applicable software vendors for development tools, operating
systems and utilities which are necessary for GBO. These
licenses will be provided at Seller's expense. In no event
will Seller have any obligation for obtaining or continuing
such licenses on GBO's behalf when the Computer Support
Services are no longer provided by Seller.
1.3 DATA CENTER. The GBO-owned Mid-Range Equipment and Mid-Range
Software will be installed in Seller's data center at its
corporate offices in Boston, Massachusetts. Seller will
provide adequate floor space and environments for the
Mid-Range Equipment as specified by the equipment
manufacturer(s), including, but not limited to, climate
control, electricity, elevator services, janitorial services,
water, security, electricity, fire control, HVAC, mail, alarm
and voice telecommunication services. A Mid-Range Equipment
operations staff equivalent to three (3) full-time associates
will provide operations support 24 hours per day, 5 and one
third days per week.
1.4 INFORMATION TECHNOLOGY SERVICES ("ITS") TECHNICAL SUPPORT
STAFF. Seller will provide a technical support staff
("Mid-Range Technical Support Staff") to support GBO's use of
the Mid-Range Software on the MidRange Equipment (and like or
similar tools or applications which may be licensed directly
by GBO, subject to the mutual agreement of the parties). The
Services to be provided by Seller's Mid-Range Technical
Support Staff will include:
a. problem and change management,
b. software upgrades,
c. capacity planning,
d. hardware and software acquisitions,
e. hardware and software installations,
f. vendor management,
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g. consultation on the pay point equipment
configuration,
h. management of the storage environment, and
i. support for the Mid-Range programs and applications
developed by Seller.
Seller's Mid-Range Technical Support Staff will consist of two
(2) full-time associates with the necessary skills and
experience to support GBO's use and operation of its Mid-Range
Equipment and Mid-Range Software.
1.5 CONTACT. Seller will assign a manager on behalf of its
Mid-Range Technical Support Staff as a primary point of
contact for communicating Seller's requirements for the
Services provided hereunder and for monitoring Seller support
services provided hereunder. Seller will be responsible for
coordinating GBO's activities on the Mid-Range Equipment,
Mid-Range Software, and any other activities which may
potentially impact the ITS infrastructure.
1.6 GBO RESPONSIBILITIES. GBO will be responsible for prioritizing
its MidRange Equipment and Mid-Range Software project
activities and communicating such priorities to Seller. GBO
will be responsible for supporting the programs and
applications developed by GBO, including Digital Eligibility,
Digital Account Service Support and CostCare Digital
interface.
1.7 DISASTER RECOVERY. Seller will coordinate GBO's disaster
recovery services for the Digital Environment under its
existing agreement with Comdisco. Said agreement provides for
an alternate computer facility and the use of equivalent
Mid-Range Equipment to run GBO's Mid-Range Software in the
event of a disaster. Seller will assign its technical support
staff referenced in Section 1.4 to provide reasonable
assistance to GBO in its disaster recovery testing and
planning.
2.0 MAINFRAME ENVIRONMENT
2.1 MAINFRAME APPLICATIONS. "Mainframe Applications" is defined as
the computer applications set forth in Attachment 1. Seller
will provide a mainframe environment (computer equipment and
peripherals) for GBO's use and operation of the Mainframe
Applications. The foregoing computer equipment and peripherals
will be housed in Seller's data center at its corporate
offices in Boston, Massachusetts. Said equipment and
peripherals will not be dedicated exclusively to running GBO's
Mainframe Applications.
2.2 MAINFRAME TOOLS. "Mainframe Tools" is defined as the mainframe
software development tools, operating system software and
utilities, including but not limited to those set forth in
Attachment 2. The Mainframe Tools will be provided for GBO's
non-exclusive use on the computer equipment and peripherals
referenced in Section 2.1 above. Seller will obtain the
necessary licenses from the applicable software vendors to
provide for GBO's use thereof, at its expense. In no event
will Seller have any obligation for obtaining or continuing
such licenses
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on GBO's behalf when the Computer Support Services are no
longer provided by Seller.
2.3 ITS TECHNICAL SUPPORT STAFF. Seller will provide a technical
support staff ("Mainframe Technical Support Staff") to support
GBO's use of its Mainframe Applications and Mainframe Tools
hereunder (and like or similar Mainframe Applications and/or
Mainframe Tools which may be licensed directly by GBO, subject
to the mutual agreement of the parties). The Services provided
by Seller's Mainframe Technical Support Staff will include:
a. problem and change management,
b. software upgrades,
c. capacity planning,
d. hardware and software acquisitions,
e. hardware and software installations,
f. management of the storage environment, and
g support for the mainframe programs and applications
developed by Seller's Mainframe Technical Support
Staff set forth in Attachment 1.
2.4 CONSULTING SERVICES. Seller will provide reasonable technical
consulting and support services, as needed, for GBO's
mainframe development activities consistent with previous
levels of consulting and support services (i.e., application
design, package selection, testing, etc.). Any extraordinary
consulting and/or support services requested by GBO will be
subject to the mutual agreement of the parties and may be
subject to a separate consulting fee.
2.5 MAINFRAME APPLICATIONS - VENDOR CORRESPONDENCE. GBO will be
responsible for communicating any performance problems to the
applicable vendors relative to the Mainframe Applications.
Seller will cooperate with GBO in communicating any
performance problems to the vendors.
2.6 MAINFRAME TOOLS - VENDOR CORRESPONDENCE. Seller will be
responsible for communicating any performance problems to the
applicable vendors relative to the Mainframe Tools. GBO will
cooperate with Seller in the identification of any performance
problems.
2.7 DISASTER RECOVERY. Seller will be responsible for defining its
disaster recovery support requirements for its mainframe
environment, and for contracting with a third party to provide
an alternate computer facility and mainframe environment in
the event of a disaster, at Seller's expense.
2.8 GBO RESPONSIBILITIES. GBO will be responsible for supporting
the mainframe programs and applications developed by GBO set
forth in Attachment 1.
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3.0 SERVICE LEVELS. GBO's requirements for the ITS Services provided
hereunder for the Mainframe environments are set forth in Attachment 3
hereto (i.e., response times, availability of technical support staff
and computer resources, target turnaround times for problem
resolutions, method for prioritizing workloads, etc.).
4.0 SELLER'S TECHLINE. Seller will provide and maintain a TechLine to be
used by GBO in requesting certain support services from ITS. The
specific support services to be requested through Seller's TechLine are
set forth in Attachment 4 hereto.
5.0 SECURITY, GBO will strictly abide by Seller's Security Procedures and
Policies as outlined in Seller's ITS Standards & Procedures.
Seller will provide GBO with reasonable consulting services to address
application security issues and the maintenance of Seller's RACF rule
database, consistent with previous levels of consulting and support
services. Any extraordinary consulting and/or support services
requested by GBO will be subject to the mutual agreement of the parties
and may be subject to a separate consulting fee.
6.0 DATA NETWORK
6.1 NETWORK LINES. GBO will order, install and pay monthly costs
for network lines between the new GBO building and the
Seller's corporate offices. Seller will monitor and manage
these lines. For network lines dedicated to GBO traffic, GBO
will pay all fees, but Seller will monitor and manage these
lines. For lines that are shared between GBO and another
division or affiliate of Seller, Seller will retain the line,
and responsibility for monitoring and managing it, but provide
for its use by GBO, subject to a charge back fee.
6.2 NETWORK EQUIPMENT. Seller will provide for GBO's use of
related network equipment. GBO will be responsible for
acquiring, installing and maintaining any such network
equipment, at its expense, when the Computer Support Services
are no longer provided by Seller. GBO will provide a secure
environment for storing any monitoring and/or management
equipment reasonably deemed necessary by Seller for supporting
GBO's use of such network equipment.
6.3 LOCAL AREA NETWORK EQUIPMENT. GBO will be responsible for
maintaining its local area network equipment and servers, at
its expense, including, but not limited to, remedial and
preventive maintenance, wiring, software upgrades and related
support services.
6.4 CONSULTING SERVICES. Seller will provide reasonable
communications consulting and design support services, as
needed, consistent with previous levels of communications
consulting and design support services. Any extraordinary
communications consulting and design support services
requested by GBO will be
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subject to the mutual agreement of the parties and may be subject to a
separate consulting fee.
7.0 PRINT/OUTPUT SERVICES. Seller will provide GBO with application support
services in the areas of output generation, forms design and creation,
and coordination of special cycles, consistent with previous levels of
support (i.e., Year End).
8.0 VOICE SUPPORT SERVICES
8.1 VOICE SUPPORT IN SELLER'S CORPORATE OFFICES. Prior to the
completion of the move of GBO to the new GBO building, Seller
will charge GBO for its use of Seller's PBX system, as
outlined below.
The managers of each GBO cost center will receive detailed
phone usage reports which will include: a) all outbound
calling charges (local and long distance), b) all 800 calls
which terminated at a GBO associate's desk, and c) the
phonemail box monthly charges.
As GBO associates are moved into the new GBO building, Seller
will remove the associated telephone from the system and the
calling charges will cease. If GBO requests that an
associate's voicemail box be kept in place for a period of
time following said associate's move, the cost center will be
charged the standard monthly rate for the box until it is
removed. GBO is exclusively responsible for supporting and
maintaining its PBX system and voice infrastructure in the new
GBO building.
8.2 FIELD VOICE SUPPORT. GBO will continue to contract with Lucent
Technologies ("Lucent") for providing voice support to GBO's
field offices and use Seller's TechLine to dispatch Lucent
support personnel as needed.
8.3 FOCAL POINT. GBO will designate one of its employees as a
focal point for voice support issues for both new GBO building
and its field offices.
9.0 STANDARDS & PROCEDURES. In all instances where a systems related
activity performed by GBO has the potential to impact any portion of
Seller's computer operations or telecommunications infrastructure, GBO
will adhere to Seller's ITS Standards & Procedures. Said Standards &
Procedures are incorporated herein and made a part hereof by this
reference and will be made available to GBO on-line. (NOTE: Seller's
Standards & Procedures are subject to change, from time to time, upon
written or electronic notice).
10.0 TAPE VAULTING. Seller will arrange for the off site vaulting of
computer tapes containing the backup data for the mainframe and
computing environments. The charges
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will be directly passed through to GBO and the mainframe
charges are included in other rates. GBO will be responsible for the
vaulting of its computer tapes when the Computer Support Services are
no longer provided by Seller. GBO will be responsible for the validity
of server/PC backup data and for managing the rotation of the backup
media. For the period when GBO associates are located within Seller's
corporate offices, they will continue to have access to the failsafe
storage area; after they are relocated to the new GBO building, backup
data will be transported to and restored in the failsafe area by
Seller.
11.0 WORKSTATION EQUIPMENT, ROUTERS, HUBS AND SERVERS. GBO will contract
with Seller for maintaining its Workstation Equipment under a separate
Maintenance Agreement between Seller and Digital Equipment Corporation
or Compucom as appropriate, at the rate and subject to the terms and
conditions of said Maintenance Agreement, GBO may also acquire
additional workstation equipment through Seller, subject to its
availability and at the prevailing rate of Seller's reseller (Compucom
Corporation).
12.0 WORKSTATION SOFTWARE. GBO will be responsible for the license and
maintenance charges under applicable license and maintenance agreements
for the Workstation Software. GBO may also acquire additional
Workstation Software through Seller, subject to its availability and at
the prevailing rates of Seller's reseller (Compucom Corporation).
13.0 E-MAIL. Seller will maintain electronic mail connectivity with GBO
using either IBM Mail or the Internet, as ultimately agreed to by both
parties. In either case, any incremental costs for software or other
technical requirements will be borne by GBO. Such costs will include,
but not be limited to, extension of monthly IBM Mail charges (planned
to cease on 12/31/96) or Internet software security packages.
14.0 RELOCATION. Following the relocation of GBO's personnel to the new GBO
building from Seller's corporate office in Boston, GBO will assume all
responsibility for the following:
a. all voice and data move and change activity (home office and
field), including wiring, labor and equipment,
b. all budget, contract and acquisition activities,
c. all voice operator activities,
d. all desktop support (software and hardware) and related
activities,
e. all technical training,
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15.0 ACCESS TO SELLER'S DATA CENTER. In no event shall GBO use or occupy, or
suffer or permit anyone to use or occupy, Seller's data center (or
other restricted areas of Seller) or do or permit anything to be done
in the data center (or other restricted areas of Seller) which: a)
causes or is liable to cause injury to persons, to the building, its
equipment, facilities or systems; b) impairs or tends to impair the
proper maintenance operation and repair of the building, equipment,
facilities or systems; or c) annoys or inconveniences other occupants
of the building. Access to the data center (and other restricted areas
of Seller) will be controlled by Seller and subject to Seller's then
current safety and security procedures.
16.0 SUPPORT FOR SELLER DEVELOPED PROGRAMS. Seller will provide GBO with any
program fixes and/or enhancements which Seller may elect to make to the
Seller developed programs, free of charge, as well as reasonable
technical support services for GBO's use and operation of the Seller
developed programs.
17.0 DISPUTE RESOLUTION PROCESS. The parties agree to negotiate in good
faith to resolve all disputes arising under this Appendix C. Primary
responsibility for resolving any dispute arising hereunder shall rest
with Seller's ITS senior vice president and GBO's senior officer in
charge of its application support services. If negotiation between such
persons fails to resolve any such dispute to the satisfaction of both
parties, then each party shall nominate one senior officer of the rank
of Vice President or higher as its representative. Such representatives
shall meet in person and alone (except for one assistant allowed for
each party) and shall attempt in good faith to resolve the dispute.
This meeting must be held before either party may seek any other method
of dispute resolution, including judicial or governmental resolutions.
Notwithstanding the foregoing, this section shall not be construed to
prevent either party from seeking and obtaining temporary equitable
remedies, including injunctive relief.
18.0 INTELLECTUAL PROPERTY. Under no circumstances will Seller or GBO
modify, test, copy or otherwise use third party intellectual property
licensed to the other party without obtaining the necessary written
authorization or license from the third party.
19.0 ADDITIONS AND DELETIONS. Each party will promptly notify the other
party of any additions or deletions to the hardware and/or software as
they relate to the Services provided hereunder. If necessary, the
applicable charge back fees will be adjusted to reflect such additions
or deletions.
X-00
00
XXXXXXXX XX XXXXXXXXXXX TO APPENDIX C
COMPUTER SUPPORT
Attachment 1: Schedule of Mainframe Applications
Attachment 2: Schedule of Mainframe Tools
Attachment 3: GBO Business Requirements for Seller ITS Services
Attachment 4: Overview of Seller's TechLine Services
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ATTACHMENT 1
Group Systems Mainframe Applications
Hanstar2 On-line
Hanstar Batch
EMC
A&H Extracts Daily
A&H Extracts Monthly
A&H Claim Reporting
Data Analysis & Reporting
Group Data Warehouse
Hanstar Reporting
Actuarial Systems
XXXX
Xxxx Systems
GLAD
IDP
Mini Group
Pricing Reconciliation
Primary Care Network
Group Systems Information Center Applications
Reinsurance Ceded
Digital Open Enrollment System
Ford IC Systems
Cash Pay
Vision Provider
X-00
00
XXX
XXXXXXXXXX 2
SCHEDULE OF MAINFRAME TOOLS
Company Name Product Name
International Business Machines ADSM
International Business Machines ISPF Version 4.1
International Business Machines DB2PM V3
International Business Machines MVS/ESA SP JES2 Version 5.2
International Business Machines RMF Version 5
International Business Machines TCP/IP 3.1 for MVS
International Business Machines Print Management Facility
International Business Machines Overlay Generation Language
International Business Machines ACF/SSP 3.8
International Business Machines Print Services Acc Facility
International Business Machines GDDM 2.1
International Business Machines Service Level Reporter 3.3
International Business Machines ACF/NCP 6.2
International Business Machines GDDM-PGF 2.0
International Business Machines APL2
International Business Machines PL/I Compiler, Library, & ITF 2.0
International Business Machines Batch Terminal Simulator
International Business Machines SMP/E
International Business Machines Host Command Facility 2.0
International Business Machines IMS/ESA Database Manager 4.1.0
International Business Machines IMS/ESA Transaction Manager 4.1.0
International Business Machines TSO Extensions 2.4
International Business Machines CICS/ESA Version 3.3
International Business Machines IMS System Utilities
International Business Machines Netview V2 1.2
International Business Machines Database 2 MVS Version 3.1
International Business Machines C/370 Compiler Version 2.2
International Business Machines Page Print Format AID/370
International Business Machines IBM Code/370
International Business Machines IBM Cobol for MVS and VM
International Business Machines Lanaguage Environment MVS/VM
International Business Machines RACF Version 2 Release 1
International Business Machines Print Services Facility 2.1
International Business Machines Data Interchange/MVS CICS
International Business Machines ACF/VTAM V4 MVS/ESA
International Business Machines Information/Management V6
International Business Machines DFSMS/MVS Version 1 Rel 1
International Business Machines High Level Assembler MVS
International Business Machines QMF 3.1.1
International Business Machines 5280 Communications Utilities
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Company Name Product Name
International Business Machines 5280 Utilities
International Business Machines Fortran IV (G1) Compiler
International Business Machines Fortran IV Library (Mod I)
International Business Machines TSO Data Utilities
International Business Machines Emulation Program/3725
International Business Machines Document Composition Facility
International Business Machines Document Library Facility
International Business Machines MQ Series for MVS/ESA Ver 1.1.3
ASI (Applications Software Inc) Interrogate
Xxxxxxx Information Systems Catalog EXT MVS
Cambridge Computer Associates Crosstabs with Retrieval Option
Candle DB/SMU
Candle OMEGAMON II For CICS
Candle OMEGAMON II For DB2
Candle OMEGAMON II For IMS
Candle OMEGAMON II For MVS
Computer Associates CA-Easytrieve Plus
Computer Associates CA-Easytrieve Plus IMS Option
Computer Associates IMS/Culprit MVS
Computer Associates JCLCHECK MVS
Computer Associates Multi Image Allocation (tape)
Computer Associates ONE MVS - (TMS)
Computer Associates PDSMAN
Computer Associates Prevail/XP-Automation for MVS
Computer Associates Prevail/XP-Automation for MVS/IMS
Computer Associates Prevail/XP-Automation for MVS/MSF
Computer Associates Telon Base MVS
Computer Associates Telon Cobol Language Option MVS
Computer Associates Telon DB2 Target Option MVS
Computer Associates Telon Design Facility TSO MVS
Computer Associates Telon IMS/DB Target Option MVS
Computer Associates Telon IMS/DC Target Option MVS
Compuware Abend-AID DB2
Compuware Abend-AID/MVS
Compuware CICS Abend-AID DB2
Compuware CICS Abend-AID/MVS & Radar
Compuware File-AID/SPF
Compuware File-AID/XE
Compuware Xpediter/CICS
Cybermation ESP (Unix Extension for RS/6000)
Cybermation ESP Workload Manager
Cybermation ESPx (Extension for MVS)
Diversified Software Systems DOCU/TEXT
Document Sciences Compuset 6.0
Information Retrieval Companies DBAV5
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Company Name Product Name
Information Retrieval Companies DMUV5
Innovative Designs DC Monitor Extensions
Manugistics APL *PLUS
Xxxxxxx Consultants MXG Software Support
Micro Decisionware PC/SQL Link
Mobius Document Direct
Mobius Infopac
Optima ChangeMan MVS
Optima ChangeMan MVS DB2 Option
Pace DASD Management System
Pace Data Center Accounting System
PanOrama Sunrise
Rocket Complier
Rocket Manager
SAS Institute Base SAS
SAS Institute SAS/ACCESS DB2
SAS Institute SAS/FSP
SAS Institute SAS/GRAPH
Simware SIM3278 VTAM 6.0.1
Software Engineering of America PDSFAST
StandardWare DBAid
Sterling Software Advanced Network Management
Sterling Software Connect Direct(SNA) MVS
Sterling Software SOLVE:Access - MVS
Sterling Software Supertracs for MVS Combo
Tangram AM:PM
Tangram AM:PM Driver
Tangram AM:PM EASI
Tangram AM:PM Windows
Tangram DDC LU2
Tangram DDC NTRD
Trilogy SpaceFinder
ViaSoft Insight
ViaSoft SmartEdit
ViaSoft SmartTest (TSO)
ViaSoft VIA/ValidDate
XEROX HFDL/MVS Host SW
State Street Bank & Trust Co. Data Processing Services regarding
Guaranteed Access Account Program
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ATTACHMENT 3
GBO BUSINESS REQUIREMENTS FOR SELLER ITS SERVICES
The GBO Business acquired by Buyer (hereinafter in this Attachment "GBO") and
the Seller's ITS Division ("ITS") agree to support objectives and conditions set
forth in this attachment.
The intent of this attachment is to:
- establish a support relationship between the parties; the
nature of which is likely to be dynamic rather than static due
to changes in business drivers for GBO and ITS.
- Ensure that business needs are properly met;
- clarify the service and support requirements and
responsibilities.
As a result of the constantly changing business requirements and technological
advances, this attachment will be reviewed on an annual basis to insure it
remains current.
1. Architecture
The GBO processing architecture for claims processing has two major
components. They are on-line processing and batch processing. In
addition there are a number of administrative systems, dominated by the
billing and accounting system called CASS, which is client server
system where the server is DB2 on the mainframe. Both are critical to
the success and effectiveness of GBO's business.
Batch Processing. The Batch processing system for the claims system
begins at 7:30 p.m. E.S.T. each evening. As the claims system,
Hanstar2, is a true on-line interactive update system, it is not
necessary for the batch cycle to be completed before the on-line system
is brought up for the next business day. There are a number of batch
jobs that must be completed and these are prioritized to be done as
early in the batch cycle as possible. The system completes the claim
payment cycle through the production of checks/EOBs, daily accounting
reports and feeds administrative reports.
On-Line Processing. The on-line systems are separated into several
distinct functions. The Hanstar2 claim payment system which provides
support to all field claim offices across the country; the CASS system,
which provides support for billing and accounting activities; and
several other on-line systems that support pricing, dividends,
contracts, association billing and administrative services.
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It will be incumbent upon the parties involved to ensure that the
installed infrastructure is capable of supporting the architectural
requirements of the business systems.
2. Roles and Responsibilities
ITS and GBO will designate individuals to be the focal points for
interfacing on mainframe and midrange systems related issues. These
individuals' responsibilities will include:
a. Monthly meetings to review results and issues;
b. Negotiating special requests;
c. Resolving issues and establishing priorities for
staff assignments; and
d. Problem escalation.
ITS Technical Services. ITS Technical Services is responsible for
creating and maintaining the technical infrastructure required to
support the GBO environment. Technical Services will provide staffing
to accommodate a workload projected to be equivalent to seven (7) full
time systems programmers. This is consistent with previous support
levels. Workloads and priorities will be determined and scheduled
through the ITS Relationship Manager with input from the GBO
Relationship Manager.
TechLine. The TechLine is responsible for assisting the GBO Production
Support teams with online and client/server environmental problems.
Escalation procedures for problems are defined by communication from
the problem source through GBO Help Desk operations staff, and up to
the management of both ITS and GBO using existing procedures. The
Relationship Managers will also be notified and it will be their
responsibility to resolve any issues.
With very few exceptions, the GBO Help Desk will be the primary contact
for GBO clients. The GBO Production teams will assess the problem and
will determine if the TechLine should be contacted.
Computer Operations. Computer Operations is responsible for monitoring
and reporting problems with system level hardware and software used to
support the GBO applications. This function will be staffed on a 7X24
hour basis and special requests outside of the Seller's normal work
hours (7:00 a.m. to 5:00 p.m., Eastern Standard Time) will be addressed
to the shift supervisor. All batch problems will be serviced in the
existing traditional Job scheduling notification and escalation
workflow.
GBO Systems. The GBO Systems Department is responsible for all
application sets and administration of all relevant databases. GBO
Systems will have primary responsibility for these systems. This
includes problem identification, resolution, maintenance and support of
files and data. The team will also be responsible for change controls
as it
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pertains to these applications. GBO Systems will insure that their
information on ESP Scheduler remains current and correct.
GBO Systems personnel will adhere to all standard Seller operations
practices (i.e., change control, problem management, data security,
etc.).
Vendors. ITS will interface with vendors on behalf of GBO for system
and layered software products as well as third party software. This
will include but not be exclusive to hardware/software implementation
and systems support. The use of vendor resources in resolving
hardware/system problems will be managed by ITS. The use of vendor
resources in resolving application problems will be managed by GBO
Systems with ITS acting as a technical consultant.
3. Production/System Support
GBO Business Group Systems teams will be the primary contact for
Computer operations on both online and batch components to the GBO
system.
The call list is maintained by GBO on the Mainframe Call List on TSO.
In cases where the call individual is not available, follow
instructions in each respective call list. The GBO clients will contact
the GBO Systems team prior to calling the TechLine for system problems
during normal business hours (8:00 a.m. - 5:00 p.m. Eastern Standard
Time).
Changes to Production Systems. Changes to the production system and
special events such as long running monthly sweeps will be coordinated
through a major events calendar maintained in Lotus Notes. All GBO
batch jobs will be scheduled through ESP Scheduler.
ITS will be notified of changes in a timely manner to allow for proper
testing and preparation prior to implementation.
4. Support Process
A. Online Processing
Seller will use reasonable efforts to assure that the mainframe online
component will be available Monday through Friday from 6:00 a.m.
through 12:00 midnight Eastern Standard Time. The availability goal for
all on-line networks will be 99.8%. Sunday availability will follow
corporate standards with notification to GBO as to when the systems
will be unavailable. The Sunday goal being to provide as many hours as
possible, but the available time will not be traced for performance
purposes.
Seller will use reasonable efforts to assure that the midrange online
components will be available Monday through Friday from 6:00 a.m.
through 12:00 midnight Eastern Standard Time. The response time
objective for the Hanstar on-line network will be 95% of all
transactions occurring in 6 seconds or less.
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X. Xxxxx Processing
All GBO batch processing will be scheduled and controlled by ESP
Scheduler. Major batch processing includes the monthly and quarterly
processing, monthly backups, monthly report processing and nightly
report processing. The significant processing from these systems may be
split over several days to avoid conflict with other processing.
Seller will use reasonable efforts to assure that performance for the
GBO workload will be consistent with expectations established annually
with the GBO Capacity Planning Process.
Network impacts caused by program abends,hardware failures or heavy
batch processing will be communicated to GBO Systems as they occur but
not later than 5:00 a.m., Eastern Standard Time.
Problem Tracking and Reporting. The online system will be tracked on
the Remedy tracking system with availability percentages reported to
ITS Management on a monthly basis. Availability and outages will appear
in The Daily Flash.
Any incidence of failure will be reported to the Remedy tracking
system. A Remedy ticket will be prepared. This information will be
discussed at the weekly ITS Management meeting where GBO will be
represented by the Relationship Manager named pursuant to Section 2
above.
Remedy tickets for any failures of the GBO Systems will be discussed at
the 8:00 a.m. Eastern Standard Time daily ITS meeting and promptly
assigned to the department responsible for the resolution and
documentation of the issue.
Remedy tickets will be discussed at the monthly ITS review meeting to
ensure the problem has been properly tracked and resolved. Information
text within the tickets will be kept current by GBO.
Problem Resolution/Escalation Process. If a failure to the operating
system or any system software occurs, either the Tech Line or the
Operations Staff will notify the GBO and follow the existing escalation
procedures to inform GBO and Seller management. The Relationship
Managers will also be notified.
5. System Response and Recovery
Application Notification Measures:
Batch. The GBO batch systems will process on the mainframe processors
in the overnight environment. Batch abends will be monitored by the
Operations staff and calls will be made to GBO Systems within 30
minutes of the failure.
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On-Line. The online systems will be monitored by the ITS Staff. Daytime
failure of the hardware platform or systems software will be
communicated to GBO Systems by ITS within 30 minutes at any time of the
day. Nighttime failures will be communicated to GBO Systems and ITS
Tech Support as they occur.
Data Responsibilities. The information contained in system and data
backups will be property of GBO and be maintained through the existing
Seller ADSM System. The scheduling and administration of these backups
will remain the shared responsibility of GBO Systems and Seller Tech
Support Teams. ITS will maintain its current schedule for all
production applications.
Tech Support will restore mainframe data base and other system data
from the most recent system backups. It will be the responsibility of
the GBO system area to ensure the files are restored to the proper
generations and are in synchronization with other department and
company files. Tech Support will restore midrange system data from the
most current system backups and ensure the files are in synchronization
with necessary business needs.
Special Considerations. The mainframe and midrange systems may be
unavailable at specific times on Sundays due to scheduled ITS system
maintenance and disaster recovery backups, as appropriate. The
unavailable time will be coordinated through GBO Systems. The goal is
to have the system available as much as possible on Sundays but it will
not be tracked for performance purposes on that day.
Any requests to make the system unavailable Monday through Friday will
result in time being counted as unavailable time.
Special arrangements for holidays will be communicated to ITS by GBO
Systems. (The systems will be unavailable from 4:00 p.m. Christmas Eve
(12/24) until 12:01 a.m. December 26, from 8:00 a.m. on Thanksgiving to
8:00 a.m. on the following day and from 6:00 p.m. on December 31 until
10:00 a.m. on January 1.)
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OVERVIEW OF SELLER'S ITS TECHLINE
Seller's ITS TechLine provides a service to GBO on a 7X24 basis. This service
includes questions answered, level 1 problems resolution, internal and external
vendor dispatch, vendor management, problem management and problem escalation.
The TechLine is staffed with seven full-time employees and supports all
Corporate Units and Lines of Business.
GBO employees with a question or problem can call the TechLine. The TechLine
will take ownership for the call and if they can't answer the question or solve
the problem they will find someone who can.
For computer hardware problems in the Home Office and Field Offices, the
TechLine will dispatch Digital or Compucom as applicable, to repair the
equipment. (This does not include "Glass House" equipment such as CPUs, Tape
Drives and Disk Drives. Operations monitors this equipment and dispatches the
appropriate vendor when problems arise.)
For voice problems while GBO is located at Seller's corporate offices, the
TechLine will dispatch Lucent Technologies for equipment-related trouble or
maintenance. For network service, MCI or AT&T will be contacted by TechLine.
For Field Office Data Communication problems, ITS will begin problem analysis
and determine if a vendor is needed. If it is a leased line problem, ITS will
contact AT&T or MCI control centers, as appropriate, to resolve the problem. If
it is determined to be a problem with communications equipment (routers, hubs)
at the remote site, Dataserve, or other appropriate equipment vendor, will be
contacted to resolve the problem.
The TechLine will retain ownership of problems that have required a dispatch to
insure that the problem is being addressed in a timely manner. They will also
work with the vendors to resolve any service problems that may occur.
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APPENDIX D
GRAPHIC SERVICES
1. Design and coordination services: Provide graphic design and
composition services for the design/layout of internal and external
communication material. Prepare original artwork for
marketing/communication material. Work with the client to conceptualize
the client's ideas into tangible products which conform to product line
identity. Act as coordinator for projects which involve not only
Graphic Services, but also mainframe print, warehousing and mail
services.
2. Composition and print services: Provide composition and printing
services for various types of business forms, brochures, booklets,
folders, letterhead, newsletters, claim forms, directories, enrollment
forms, etc. Also provide composition and print services for EPO/PPO
directories, supplements and ID cards. If outside services are
required, provide specifications and coordination for outside print.
Provide guidance in decision making process regarding the construction
of printed material in order to achieve the most cost effective job.
Through LAN to LAN connectivity, create and maintain various business
forms for group claims, compliance and contracts.
3. Files are maintained on a file server for subsequent requests for
changes or reprints.
4. Provide bulk copying, color copying and similar services.
5. Provide high-quality multi-color printing services.
6. The service-level goal for forms-on-demand (expressed as hours until
shipped) is within 24 hours.
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APPENDIX E
OFFICE SERVICES
1. Materials management: Provide at no charge for the management of forms
and sales promotion materials used by the GBO home office and field
offices. Included in this service are forms design and control,
inventory management and warehousing management.
Purchases of custom forms, including sales tax and inbound freight to
the warehouse, are charged directly to Buyer. Outbound shipping charges
from the warehouse are also charged directly to Buyer.
Vendor charges for warehousing and ordering are charged directly to
Buyer as follows:
a. For materials warehoused: $8.00 per month per pallet
b. For materials ordered:
(1) $1.04 per each requisition
(2) $0.70 per line item requisitioned
The service-level goal for materials ordered from the warehouse is
same-day shipping.
2. Freight administration: Provide at no charge for the auditing of
carriers' invoices (e.g., rate verification, examination for duplicate
invoices and overcharges, etc.) and for freight management information
control.
3. Records Management: Provide for on-site records management (additions,
storage, inquiries, retrievals and refiles) of group claims files,
dividend files and commission cards. Also provide for off-site records
management for less active and inactive records. In addition, provide
for check look-up services, including the search for and production of
check copies as requested.
Monthly fee includes personnel expense for on-site record management
and check lookup services.
Current vendor charges below for off-site record services, which are
subject to change, are charged directly to Buyer:
a. Storage: $2.04 annual rate per 1.2 cubic foot box
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b. Retrieval: $1.50 per box
c. Round-trip travel from off-site to home office: $12.00 per box
d. Refile: $1.50 per box
e. File Destruction: $1.50 per box
Service-level goals for normal requests are as follows:
a. Retrievals from on-site storage - within 24 hours
b. Retrievals from off-site storage - next day
c. Production of check copies - within 24 hours
Special requests for large volumes of records retrievals or check
copies require negotiated service commitments.
4. Receipt and distribution of GBO Home Office mail and materials. Provide
for the pick-up and/or receipt, sort, and delivery to GBO Home Office
mail stops of incoming Postal Service mail, private carriers express
shipments, goods and materials purchased, internal home office mail and
centralized system-generated output.
Service-level goals include:
a. 5 daily (2 in the morning and 3 in the afternoon) deliveries
to internal home office mail stops of incoming mail, express
shipments, internal home office mail and centralized system
generated output.
b. Delivery of Federal Express priority overnight shipments by
10:30 a.m.
c. 4 daily pick-ups and/or deliveries of Postal Service incoming
mail.
d. Same-day delivery of goods and materials purchased.
5. Manual handling and consolidation of non-automated mail. Provide for
the manual separation and matching of explanation-of-benefits forms and
claim drafts for insertion in address-labeled, non-letter-size
envelopes (e.g., large-volume mailpieces and special- handled cases.)
Also provide for the sorting and consolidation of internal mail via
First Class/Priority Mail and mailing to field office locations. Two
new sort stations will be established for Buyer's designated
Massachusetts and California locations and outgoing mail will be
sorted, consolidated and mailed to these locations. Actual postage is
charged directly to Buyer.
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Xxxxxxx-xxxxx goal is same-day mailing of outgoing mail received by 4
p.m. in the Corporate Mail Division. (Receipt of the mail in field
locations is dependent on Postal Service delivery service standards.)
6. Automated Mail Services: Provide automated document insertion, sealing,
metering, postmarking, presorting, mail preparation and deposit with
the Postal Service of letter-size, machinable mailpieces. Actual
postage is charged directly to Buyer.
Service-level goal: Explanation-of-benefit forms, drafts, and form
letters are printed at night and then inserted, presorted and delivered
to the Postal Service the next day.
7. Maintenance and repairs of small office equipment: Provide in-house
maintenance and repairs of small office equipment off-warranty,
specifically for fax machines, electronic and electric typewriters and
calculators. Other miscellaneous equipment (fiche readers, date stamps,
et al.) may be repaired by this service. Photocopier maintenance,
however, is the responsibility of the vendor (Ricoh, Xxxxxx or Konica)
at Buyer's request.
Actual vendor charges for replacement parts and supplies and
photocopier usage are charged directly to Buyer.
Service-level goal: Repair within 2 hours or provide functional loaner
equipment until the repair is completed, if available.
8. Purchasing Services: Provide service resulting in the purchase of goods
and services at the best price, quality as defined by the customer, and
add value to each and every purchase. Consulting services on purchasing
decisions and in working with Buyer at its request in developing
requests for proposals and/or contracts are charged to Buyer. There is
no charge to Buyer for routine transactions.
Service-level goal: Receipt of goods and services in a time frame
acceptable to the customer within the vendors' constraints.
9. Address and labeling services: Provide addressing and labeling services
from address files for external mail and home office internal
distribution at Buyer's request.
Service-level goal: Normally within 24 hours of receipt of an accepted
file.
10. Business research services: Provide information as requested by Buyer
on specified business topics, such as financial information,
demographics, technology, strategic direction, etc. This service is
usually provided by on-line searches or reviews or periodicals. The
only charge to Buyer is the vendor's charge for the search at the
former's request.
11. Travel Services: Provide internal business travelers with the highest
quality travel arrangements for airlines, hotels and car rentals at the
lowest cost appropriate to the
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company's business objectives. Actual cost of airfare is charged back
to Buyer. Hotels and car rentals paid by the traveler.
Service-level goal: Immediate confirmation of arrangements.
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APPENDIX F
OUTPUT SERVICES
1. Centralized printing services - Produce mainframe- or
Xxxxxxx-LAN-generated documents (e.g. explanation of benefit forms,
claim drafts, form letters and client invoices), internal production
output, and testing output. The print production of drafts is
reconciled to the system-expected production of drafts. Provide ongoing
monitoring of print quality including the periodic testing of the
drafts' MICR line. Provide computer output microfiche.
Service-level goals: Defined due-out times exist for all jobs in order
to meet strict time frames.
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APPENDIX G
DINING AND CONFERENCE CENTER SERVICES
1. Dining services: While GBO employees continue to be located in the
Seller premises, provide coffee stops in the morning and cafeteria
dining services for breakfast and lunch. Food sales are at Xxxxxxx
employee rates. The monthly charge is for the provision of luncheon
services.
Catered coffee and pastry services, luncheons, refreshments, and
receptions can be provided at Buyer's request. Quotes or estimates are
provided in advance, if requested.
2. Conference center services: Guest rooms if available, can be provided
to Buyer employees.
Conference rooms, if available, can be provided to Buyer employees.
Different size conference rooms are available at different rates. Rates
vary according to whether the rooms are desired for a half day or full
day and depend on special equipment requested.
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APPENDIX H
CHILDCARE CENTER
Allow continued use of the Seller's Childcare Center by GBO employees while they
are located in Seller's Corporate Offices.
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APPENDIX I
LEGAL SERVICES
1. Litigation Management
Recognizing that GBO Included Business is written in the name of Xxxx
Xxxxxxx, Seller will provide legal services to Buyer with respect to
GBO Included Business as follows:
Seller's lawyers will manage litigation related to the GBO
Included Business (as defined in the Purchase and Sale
Agreement) from the Closing Time until such time as each such
case is terminated, settled, otherwise disposed of or
transferred to UniCARE Health & Life Insurance Company.
Buyer will have ultimate control and authority over
settlements, choice of local counsel and strategy. Review
points for each case will be established jointly by Buyer and
Seller legal personnel.
Functions to include:
a. Small Claims Matters
b. Workers' Compensation Intervention cases
c. Collection Litigation (for cases specified)
d. Fraud recoveries
e. Claims advice on pre-litigation matters to former GBO
claims and business personnel in Buyer
f. Coordination of and review of subpoenas and other
third party information requests directed to the GBO
Business.
2. Product Work
Seller will make available lawyers and support staff as necessary to
provide legal services to Buyer relative to the GBO Included Business.
This will include support for contract interpretation, contract
drafting, statutory interpretation and general business legal advice to
the GBO Included Business.
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APPENDIX J
TAX SERVICES
The following sets forth the tax services to be provided by the Seller to Buyer
following the closing date:
A. Seller will provide Buyer with appropriate back-up information and any
applicable calculations to allow Buyer to evaluate the accuracy and
propriety of any reimbursement request.
B. For twelve months following the Closing Date, or a shorter period if
such period is requested at any time by Buyer, Seller will provide
consultation services on the preparation of monthly federal, foreign,
state and local premium tax provisions for GAAP financial reporting
purposes and statutory reporting purposes. Consultation services will
include advice regarding the accumulation of appropriate information
and advice regarding information systems reports and capabilities.
C. For twelve months following the Closing Date, or a shorter period if
such shorter period is requested at any time by Buyer, Seller will
provide consultation on foreign, state, and local premium, license,
administration, income, property, ad valorem, and any other tax of fee
compliance and/or payment matters, including advice regarding
accumulation of appropriate information and advice regarding
information systems reports and capabilities.
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APPENDIX K
TREASURY SERVICES
Provide all necessary and appropriate treasury management and banking related
services, including the following:
1. Treasury consulting services regarding the collection and disbursement
of funds - together with the capture and reporting of related
information - and related banking services for check and electronic
collections and payment (i.e., ACH, EDI and wire transfers.)
2. Treasury operations services which provide the mechanism for electronic
transfers for funding ASO and other applications.
3. Treasury operations services to include the check issuance function for
payment of expenses, commissions and miscellaneous disbursements. This
will include data capture of invoice and accounting data, matching
enclosures and mailing checks, feeding data to other systems (general
ledger and bank reconciliation) and maintaining permanent records of
these disbursements.
4. Treasury operations services to include the check receipt function with
the capture of check and accounting data, encoding and endorsing the
check, preparing deposit tickets, and maintaining permanent records of
these receipts.
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