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Information Technology Services Agreement

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EXHIBIT 10


INFORMATION TECHNOLOGY SERVICES AGREEMENT


between


UNITED HEALTHCARE SERVICES, INC.


and


INTERNATIONAL BUSINESS MACHINES CORPORATION


dated as of


February 1, 2003


TABLE OF CONTENTS


PAGE ARTICLE 1 DEFINITIONS............................................................................... 1 ARTICLE 2 TERM...................................................................................... 7 ARTICLE 3 BASE SERVICES............................................................................. 7
3.01 Generally..................................................................................... 7
3.02 Changes to the Services....................................................................... 8
3.03 Systems Software.............................................................................. 8
3.04 Systems Software Maintenance.................................................................. 8
3.05 Additional Third Party Software............................................................... 8
3.06 New Releases and Versions of the Software..................................................... 9
3.07 Technology Developments....................................................................... 10
3.08 Licenses and Permits.......................................................................... 11
3.09 Changes in Law and Regulations................................................................ 11
3.10 Strategic Plan and Product Standards.......................................................... 11
3.11 Manufacturers' Warranties..................................................................... 12
3.12 Supplies...................................................................................... 12
3.13 Hardware Currency............................................................................. 12
3.14 Changes in Scope of Services.................................................................. 12
3.15 Changes to Base Charges....................................................................... 13
3.16 Software Manuals.............................................................................. 13
3.17 Dedicated Logical Environments................................................................ 14 ARTICLE 4 TRANSITION................................................................................ 14
4.01 Transition Services........................................................................... 14
4.02 Changes to the Transition Schedules........................................................... 14
4.03 Testing Environments.......................................................................... 14
4.04 Transition Acceptance Criteria................................................................ 15
4.05 Location Completion........................................................................... 15
4.06 Transition Completion......................................................................... 15
4.07 Incentive Payment............................................................................. 15
4.08 Incentive Credits............................................................................. 15
4.09 Usage Charges During Transition............................................................... 15


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TABLE OF CONTENTS
(continued)


PAGE
4.10 Software Conversions.......................................................................... 15 ARTICLE 5 APPLICATION RESOURCES..................................................................... 16
5.01 Application Resources......................................................................... 16
5.02 Application Resource Proposals................................................................ 16 ARTICLE 6 ADDITIONAL SERVICES....................................................................... 17
6.01 Additional Services........................................................................... 17
6.02 Third Party Services.......................................................................... 17
6.03 Acquisition and Divestiture................................................................... 18 ARTICLE 7 CUSTOMER SATISFACTION..................................................................... 19
7.01 Baseline Customer Satisfaction Survey......................................................... 19
7.02 Customer Satisfaction Survey.................................................................. 19 ARTICLE 8 PERFORMANCE STANDARDS..................................................................... 20
8.01 Base Services................................................................................. 20
8.02 New Service Levels............................................................................ 20
8.03 Adjustment of Service Levels.................................................................. 20
8.04 Performance Reports........................................................................... 20
8.05 Root-Cause Analysis........................................................................... 20 ARTICLE 9 BENCHMARKING.............................................................................. 21 ARTICLE 10 SERVICE LOCATIONS......................................................................... 21
10.01 Service Locations............................................................................. 21
10.02 Security Procedures........................................................................... 21
10.03 Security Relating to Competitors.............................................................. 22
10.04 Access to Personnel and Resources............................................................. 22 ARTICLE 11 PROJECT TEAM.............................................................................. 22
11.01 Management Committee.......................................................................... 22
11.02 IBM Project Executive......................................................................... 23
11.03 Key Employees................................................................................. 23
11.04 Project Staff................................................................................. 24
11.05 Facilities and Equipment...................................................................... 24
11.06 Review Meetings............................................................................... 24
11.07 Subcontractors................................................................................ 25


-ii-


TABLE OF CONTENTS
(continued)


PAGE
11.08 Conduct of IBM Personnel...................................................................... 25
11.09 Non-Competition............................................................................... 26 ARTICLE 12 MANAGEMENT AND CONTROL.................................................................... 26
12.01 Procedures Manual............................................................................. 26
12.02 Change Control Procedures..................................................................... 27 ARTICLE 13 PROPRIETARY RIGHTS........................................................................ 27
13.01 UHS Software.................................................................................. 27
13.02 IBM Proprietary Software...................................................................... 28
13.03 IBM Third Party Software...................................................................... 29
13.04 Software Purchased by IBM on Behalf of UHS.................................................... 29
13.05 UHS Third Party Software...................................................................... 30
13.06 Developed Software............................................................................ 30
13.07 Infringement.................................................................................. 31
13.08 Changes and Upgrades to the Systems........................................................... 31
13.09 Documentation................................................................................. 32
13.10 Cooperation Upon Divestiture.................................................................. 32 ARTICLE 14 REQUIRED CONSENTS......................................................................... 32 ARTICLE 15 UHS RESPONSIBILITIES...................................................................... 33 ARTICLE 16 REPORTS AND DATA.......................................................................... 33
16.01 Ownership of UHS Data......................................................................... 33
16.02 Correction of Errors.......................................................................... 34
16.03 Return of Data................................................................................ 34
16.04 Reports and Raw Data.......................................................................... 34
16.05 Re-Runs....................................................................................... 35 ARTICLE 17 CONTINUED PROVISION OF SERVICES........................................................... 35
17.01 Disaster Recovery............................................................................. 35
17.02 Force Majeure................................................................................. 36
17.03 Allocation of Resources....................................................................... 38 ARTICLE 18 PAYMENTS.................................................................................. 38
18.01 Base Charges.................................................................................. 38
18.02 Additional Charges............................................................................ 38


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TABLE OF CONTENTS
(continued)


PAGE
18.03 Rights of Set off............................................................................. 38
18.04 Expenses...................................................................................... 38
18.05 Unused Credits................................................................................ 39
18.06 Adjustment to Charges......................................................................... 39
18.07 Proration..................................................................................... 39
18.08 ***........................................................................................... 39
18.09 Technology Improvements....................................................................... 40 ARTICLE 19 PAYMENT SCHEDULE.......................................................................... 40
19.01 Charges....................................................................................... 40
19.02 Detailed Invoices............................................................................. 41
19.03 Time of Payment............................................................................... 41
19.04 Disputed Charges or Credits................................................................... 41 ARTICLE 20 TAXES..................................................................................... 42 ARTICLE 21 AUDITS.................................................................................... 44
21.01 Processing.................................................................................... 44
21.02 Charges....................................................................................... 44
21.03 Unauthorized Access........................................................................... 45
21.04 Record Retention.............................................................................. 46
21.05 Access and Reports............................................................................ 46
21.06 Audit Software................................................................................ 46
21.07 Facilities.................................................................................... 47
21.08 Third Party Audit............................................................................. 47 ARTICLE 22 CONFIDENTIALITY........................................................................... 47
22.01 Confidential Information...................................................................... 47
22.02 Attorney-Client Privilege..................................................................... 48
22.03 Equitable Relief.............................................................................. 49
22.04 Unauthorized Acts............................................................................. 49
22.05 Legal Action.................................................................................. 50


- ---------------------------------- *** Represents text deleted pursuant to a confidentiality request filed with
the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.


-iv-


TABLE OF CONTENTS
(continued)


PAGE ARTICLE 23 REPRESENTATIONS, WARRANTIES AND COVENANTS................................................. 50
23.01 By UHS........................................................................................ 50
23.02 By IBM........................................................................................ 51
23.03 Government Contracts.......................................................................... 51 ARTICLE 24 TERMINATION............................................................................... 52
24.01 Termination for Convenience................................................................... 52
24.02 Termination for Sale of IBM................................................................... 52
24.03 Termination for Sale of UHS................................................................... 52
24.04 Termination for Material Breach............................................................... 53
24.05 Other Terminations............................................................................ 53 ARTICLE 25 TERMINATION CHARGE........................................................................ 53
25.01 Termination for Convenience................................................................... 53
25.02 Termination for Sale of UHS................................................................... 54
25.03 Proration..................................................................................... 54
25.04 No Additional Charges......................................................................... 54 ARTICLE 26 TERMINATION ASSISTANCE.................................................................... 54 ARTICLE 27 EXIT PLAN................................................................................. 55 ARTICLE 28 DISPUTE RESOLUTION........................................................................ 56
28.01 Project Executives............................................................................ 56
28.02 Management Committee.......................................................................... 56
28.03 Senior Management............................................................................. 56
28.04 Judicial Resolution........................................................................... 57
28.05 Continuity of Services........................................................................ 57 ARTICLE 29 INDEMNIFICATION........................................................................... 57
29.01 By UHS........................................................................................ 57
29.02 By IBM........................................................................................ 58
29.03 Indemnification Procedures.................................................................... 59 ARTICLE 30 DAMAGES................................................................................... 59
30.01 Direct Damages................................................................................ 59
30.02 Consequential Damages......................................................................... 61
30.03 Performance Credits........................................................................... 61


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TABLE OF CONTENTS
(continued)


PAGE ARTICLE 31 INSURANCE................................................................................. 62 ARTICLE 32 MISCELLANEOUS PROVISIONS.................................................................. 63
32.01 Assignment and Change of Control.............................................................. 63
32.02 Notices....................................................................................... 64
32.03 Counterparts.................................................................................. 65
32.04 Headings...................................................................................... 65
32.05 Relationship.................................................................................. 65
32.06 Consents, Approvals and Requests.............................................................. 65
32.07 Severability.................................................................................. 66
32.08 Waiver........................................................................................ 66
32.09 Publicity..................................................................................... 66
32.10 Entire Agreement.............................................................................. 66
32.11 Amendments.................................................................................... 67
32.12 Governing Law................................................................................. 67
32.13 Survival...................................................................................... 67
32.14 Third Party Beneficiaries..................................................................... 67
32.15 Covenant of Further Assurances................................................................ 67
32.16 Solicitation.................................................................................. 67
32.17 Remedies...................................................................................... 68


-vi-


LIST OF EXHIBITS


Exhibit 1 Mainframe Services


Exhibit 1.1: Services


Exhibit 1.2: Service Levels


Exhibit 1.3: Charges


Exhibit 1.4: Software


Exhibit 1.5: Machines


Exhibit 1.6: Standards


Exhibit 1.7: Customer Satisfaction Survey


Exhibit 1.8: Transition


Exhibit 1.9: Mainframe Reports


Exhibit 1.10: Facilities Management


Exhibit 2 Customer Support Services


Exhibit 2.1: Services


Exhibit 2.2: Intentionally Omitted


Exhibit 2.3: Charges


Exhibit 3 Managed Server Farm Services


Exhibit 3.1: Services


Exhibit 3.2: Intentionally Omitted


Exhibit 3.3: Charges


Exhibit 3.5: Machines


Exhibit 4 Network Services


Exhibit 4.1: Services


Exhibit 4.2: Intentionally Omitted


Exhibit 4.3: Charges


vii


Page
----
Exhibit 4.4: Software


Exhibit 4.5: Machines


Exhibit 5 Universal Server Farm Services


Exhibit 5.1: Services


Exhibit 5.2: Intentionally Omitted


Exhibit 5.3: Charges


Exhibit 6 Benchmarking


Exhibit 7 Service Locations


Exhibit 8 Key Employees


Exhibit 9 UHS Competitors


Exhibit 10 Audit Procedures


Exhibit 11 UHS Expense Policy


Exhibit 12 Subcontractors


Exhibit 13 Termination Assistance Services


Exhibit 14 Strategic Plan


Exhibit 15 Procedures Manual Outline


Exhibit 16 Change Control Procedures


Exhibit 17 Intentionally Omitted


Exhibit 18 Software Management Process


Exhibit 19 Miscellaneous Services


Exhibit 19.1: Miscellaneous Services


Exhibit 19.2: Intentionally Omitted


Exhibit 19.3: Charges


Exhibit 20 IBM Competitors


viii


This INFORMATION TECHNOLOGY SERVICES AGREEMENT, dated as of February 1, 2003, is entered into by and between UNITED HEALTHCARE SERVICES, INC., a Delaware corporation, and INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York corporation. Capitalized terms not otherwise defined herein have the meanings set forth in Article 1.


W I T N E S S E T H:


WHEREAS, the MetraHealth Companies, Inc. and Integrated Systems Solutions Corporation previously entered into that certain Information Technology Services Agreement, dated as of November 1, 1995, as amended (the "Original Agreement"); and


WHEREAS, UHS and IBM, as successors in interest to the MetraHealth Companies, Inc., and Integrated Systems Solutions Corporation, respectively, entered into a renegotiation of the Original Agreement to increase the scope of services provided under the Original Agreement and to document certain other changes to the Base Services and the relationship between the Parties; and


WHEREAS, UHS and IBM have engaged in extensive negotiations and discussions that have culminated in the formation of the relationship to provide information technology services according to Service Levels and according to the terms and conditions as described in this Agreement; and


WHEREAS, UHS and IBM desire to terminate the Original Agreement, without cost or penalty to either Party, and enter into this Agreement; and


WHEREAS, UHS and IBM have, prior to the Effective Date, entered into a number of Additional Services Schedules, which (except as indicated otherwise in the Agreement) shall be terminated effective as of the Effective Date.


NOW, THEREFORE, for and in consideration of the agreements of the Parties set forth below, UHS and IBM agree as follows:


ARTICLE 1 DEFINITIONS


The following defined terms shall have the meanings specified below:


"Additional Charges" shall mean the fees described in an Additional Services
Schedule.


"Additional Services" shall mean those services requested by UHS and provided by
IBM that are outside the scope of the Base Services.


"Additional Services Proposal" shall mean the proposal, submitted by IBM in
response to a Request for Service for the performance of an Additional
Service, containing a description of the scope and functionality of
such Additional Service and an estimate, as may be applicable, of the
computing, communications, human resources, capacity requirements and
charges necessary to develop and implement such Additional Service.


"Additional Services Schedule" shall mean, in the event that UHS elects to have
IBM perform an Additional Service, a written agreement executed by UHS
and IBM.


"Affiliate" shall mean, with respect to a Party, any entity controlling,
controlled by or unde
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