UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2004
or
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 1-10864
UnitedHealth Group Incorporated
(Exact name of registrant as specified in its charter)
Minnesota | 41-1321939 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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UnitedHealth Group Center 9900 Bren Road East Minnetonka, Minnesota |
55343 (Zip Code) |
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(Address of principal executive offices) |
(952) 936-1300
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
As of May 3, 2004, 615,823,765 shares of the registrants Common Stock, $.01 par value per share, were issued and outstanding.
INDEX
2
Item 1. Financial Statements (unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except share and per share data)
March 31, 2004 |
December 31, 2003 |
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ASSETS |
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Current Assets |
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Cash and Cash Equivalents |
$ | 2,714 | $ | 2,262 | ||
Short-Term Investments |
216 | 486 | ||||
Accounts Receivable, net |
873 | 745 | ||||
Assets Under Management |
1,989 | 2,019 | ||||
Deferred Income Taxes and Other |
652 | 608 | ||||
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Total Current Assets |
6,444 | 6,120 | ||||
Long-Term Investments |
7,249 | 6,729 | ||||
Property, Equipment, Capitalized Software, and Other Assets, net |
1,182 | 1,096 | ||||
Goodwill |
5,446 | 3,509 | ||||
Other Intangible Assets, net |
531 | 180 | ||||
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TOTAL ASSETS |
$ | 20,852 | $ | 17,634 | ||
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Current Liabilities |
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Medical Costs Payable |
$ | 4,664 | $ | 4,152 | ||
Accounts Payable and Accrued Liabilities |
1,589 | 1,575 | ||||
Other Policy Liabilities |
2,074 | 2,117 | ||||
Commercial Paper and Current Maturities of Long-Term Debt |
150 | 229 | ||||
Unearned Premiums |
662 | 695 | ||||
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Total Current Liabilities |
9,139 | 8,768 | ||||
Long-Term Debt, less current maturities |
2,250 | 1,750 | ||||
Future Policy Benefits for Life and Annuity Contracts |
1,614 | 1,517 | ||||
Deferred Income Taxes and Other Liabilities |
622 | 471 | ||||
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Commitments and Contingencies (Note 12) |
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Shareholders Equity |
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Common Stock, $0.01 par value 1,500 shares authorized; 614 and 583 issued and outstanding |
6 | 6 | ||||
Additional Paid-In Capital |
1,558 | 58 | ||||
Retained Earnings |
5,469 | 4,915 | ||||
Accumulated Other Comprehensive Income: |
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Net Unrealized Gains on Investments, net of tax effects |
194 | 149 | ||||
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Total Shareholders Equity |
7,227 | 5,128 | ||||
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TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
$ | 20,852 | $ | 17,634 | ||
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See notes to condensed consolidated financial statements
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per share data)
Three Months Ended March 31, |
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2004
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2003
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REVENUES |
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Premiums |
$ | 7,264 | $ | 6,148 | ||||
Services |
789 | 770 | ||||||
Investment and Other Income |
91 | 57 | ||||||
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Total Revenues |
8,144 | 6,975 | ||||||
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MEDICAL AND OPERATING COSTS |
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Medical Costs |
5,869 | 5,050 | ||||||
Operating Costs |
1,317 | 1,199 | ||||||
Depreciation and Amortization |
82 | 73 | ||||||
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Total Medical and Operating Costs |
7,268 | 6,322 | ||||||
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EARNINGS FROM OPERATIONS |
876 | 653 | ||||||
Interest Expense |
(24 | ) | (23 | ) | ||||
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EARNINGS BEFORE INCOME TAXES |
852 | 630 | ||||||
Provision for Income Taxes |
(298 | ) | (227 | ) | ||||
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NET EARNINGS |
$ | 554 | $ | 403 | ||||
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BASIC NET EARNINGS PER COMMON SHARE |
$ | 0.92 | $ | 0.68 | ||||
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DILUTED NET EARNINGS PER COMMON SHARE |
$ | 0.88 | $ | 0.65 | ||||
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BASIC WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |
601 | 597 | ||||||
DILUTIVE EFFECT OF OUTSTANDING STOCK OPTIONS |
29 | 26 | ||||||
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DILUTED WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |
630 | 623 | ||||||
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See notes to condensed consolidated financial statements
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Three Months Ended March 31, |
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2004
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2003
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OPERATING ACTIVITIES |
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Net Earnings |
$ | 554 | $ | 403 | ||||
Noncash Items: |
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Depreciation and Amortization |
82 | 73 | ||||||
Deferred Income Taxes and Other |
22 | 8 | ||||||
Net Change in Other Operating Items, net of effects from acquisitions, sales of subsidiaries and changes in AARP balances: |
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Accounts Receivable and Other Current Assets |
39 | 17 | ||||||
Medical Costs Payable |
173 | 238 | ||||||
Accounts Payable and Accrued Liabilities |
136 | 89 | ||||||
Unearned Premiums |
(96 | ) | (103 | ) | ||||
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Cash Flows From Operating Activities |
910 | 725 | ||||||
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INVESTING ACTIVITIES |
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Cash Paid for Acquisitions, net of cash assumed and other effects |
(527 | ) | (6 | ) | ||||
Purchases of Property, Equipment and Capitalized Software, net |
(83 | ) | (92 | ) | ||||
Purchases of Investments |
(521 | ) | (685 | ) | ||||
Maturities and Sales of Investments |
738 | 1,112 | ||||||
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Cash Flows (Used For) From Investing Activities |
(393 | ) | 329 | |||||
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FINANCING ACTIVITIES |
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Proceeds from Common Stock Issuances |
125 | 73 | ||||||
Common Stock Repurchases |
(627 | ) | (496 | ) | ||||
Repayments of Commercial Paper, net |
(79 | ) | (409 | ) | ||||
Proceeds from Issuance of Long-Term Debt |
500 | 450 | ||||||
Other |
16 | | ||||||
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Cash Flows Used For Financing Activities |
(65 | ) | (382 | ) | ||||
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INCREASE IN CASH AND CASH EQUIVALENTS |
452 | 672 | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
2,262 | 1,130 | ||||||
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CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 2,714 | $ | 1,802 | ||||
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Supplementary schedule of non-cash investing activities: |
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Common stock issued for acquisitions |
$ | 1,932 | $ | |
See notes to condensed consolidated financial statements
5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation and Use of Estimates
Unless the context otherwise requires, the use of the terms the Company, we, us, and our in the following refers to UnitedHealth Group Incorporated and its subsidiaries.
The accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting solely of normal recurring adjustments, needed to present the financial results for these interim periods fairly. In accordance with the rules and regulations of the Securities and Exchange Commission, we have omitted certain footnote disclosures that would substantially duplicate the disclosures contained in our annual audited financial statements. Read together with the disclosures below, we believe the interim financial statements are presented fairly. However, these unaudited condensed consolidated financial statements should be read together with the consolidated financial statements and the notes included in our Annual Report on Form 10-K for the year ended December 31, 2003.
These consolidated financial statements include certain amounts that are based on our best estimates and judgments. These estimates require us to apply complex assumptions and judgments, often because we must make estimates about the effects of matters that are inherently uncertain and will change in subsequent periods. The most significant estimates relate to medical costs, medical costs payable, revenues, contingent liabilities, and asset valuations, allowances and impairments. We adjust these estimates each period, as more current information becomes available, and any adjustment could have a significant impact on our consolidated operating results. The impact of any changes in estimates is included in the determination of earnings in the period in which the estimate is adjusted.
2. Stock-Based Compensation
We account for activity under our stock-based employee compensation plans under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. Accordingly, we do not recognize compensation expense when we grant employee stock options because we grant stock options at exercise prices not less than the fair value of our common stock on the date of grant.
The following table shows the effect on net earnings and earnings per share had we applied the fair value expense recognition provisions of Statement of Financial Accounting Standards (FAS) No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation (in millions, except per share data).
For the Three Months Ended March 31, |
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2004
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2003
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NET EARNINGS |
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As Reported |
$ | 554 | $ | 403 | ||||
Compensation Expense, net of tax effect |
(32 | ) | (29 | ) | ||||
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Pro Forma |
$ | 522 | $ | 374 | ||||
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BASIC NET EARNINGS PER COMMON SHARE |
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As Reported |
$ | 0.92 | $ | 0.68 | ||||
Pro Forma |
$ | 0.87 | $ | 0.63 | ||||
DILUTED NET EARNINGS PER COMMON SHARE |
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As Reported |
$ | 0.88 | $ | 0.65 | ||||
Pro Forma |
$ | 0.83 | $ | 0.60 |
6
UNITEDHEALTH GROUP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. Acquisitions
On April 26, 2004, the Company through our Health Care Services business segment entered into a definitive agreement to acquire Oxford Health Plans, Inc. (Oxford). Oxford provides health care and benefit services for individuals and employers, principally in New York City, northern New Jersey and southern Connecticut. We expect that this merger will significantly strengthen our market position in this region and provide substantial distribution opportunities for our other UnitedHealth Group businesses. Under the terms of the agreement, Oxford shareholders will receive 0.6357 shares of UnitedHealth Group common stock and $16.17 in cash for each share of Oxford common stock they own. Total consideration for the transaction, to be issued upon closing, is comprised of approximately 51.8 million shares of UnitedHealth Group common stock (valued at approximately $3.4 billion based upon the average of UnitedHealth Groups share closing price for two days before, the day of and two days after the acquisition announcement date of April 26, 2004), approximately $1.3 billion in cash and UnitedHealth Group vested common stock options with an estimated fair value of $285 million to be issued in exchange for Oxfords outstanding vested common stock options. Under the purchase method of accounting, the total purchase price will be allocated to the net tangible and intangible assets of Oxford based on their estimated fair values at the closing of the transaction. Pending regulatory and Oxford shareholder approvals, we expect this transaction will close in the fourth quarter of 2004.
On February 10, 2004, our Health Care Services business segment acquired Mid Atlantic Medical Services, Inc. (MAMSI). MAMSI offers a broad range of health care coverage and related administrative services for individuals and employers in the mid-Atlantic region of the United States. This merger significantly strengthens UnitedHealthcares market position in the mid-Atlantic region and provides substantial distribution opportunities for other UnitedHealth Group businesses. Under the terms of the purchase agreement, MAMSI shareholders received 0.82 shares of UnitedHealth Group common stock and $18 in cash for each share of MAMSI common stock they owned. Total consideration issued was approximately $2.7 billion, comprised of 36.4 million shares of UnitedHealth Group common stock (valued at $1.9 billion based on the average of UnitedHealth Groups share closing price for two days before, the day of and two days after the acquisition announcement date of October 27, 2003) and $800 million in cash. The purchase price and costs associated with the acquisition exceeded the preliminary estimated fair value of the net tangible assets acquired by approximately $2.1 billion. We have preliminarily allocated the excess purchase price over the fair value of the net tangible assets acquired to finite-lived intangible assets of $360 million and associated deferred tax liabilities of $126 million, and goodwill of approximately $1.9 billion. The finite-lived intangible assets consist primarily of member lists and health care physician and hospital networks, with an estimated weighted-average useful life of 19 years. The acquired goodwill is not deductible for income tax purposes. Our preliminary estimate of the fair value of the tangible assets/(liabilities) as of the acquisition date, which is subject to further refinement, is as follows:
(in millions unaudited) |
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Cash, Cash Equivalents and Investments |
$ | 736 | ||
Accounts Receivable and Other Current Assets |
252 | |||
Property, Equipment, Capitalized Software and Other Assets |
91 | |||
Medical Costs Payable |
(292 | ) | ||
Other Current Liabilities |
(132 | ) | ||
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Net Tangible Assets Acquired |
$ | 655 | ||
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The results of operations and financial condition of MAMSI have been included in our Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets since the acquisition date. The unaudited pro forma financial information presented below assumes that the acquisition of MAMSI had occurred as of the
7
UNITEDHEALTH GROUP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
beginning of each respective period. The pro forma adjustments include the pro forma effect of UnitedHealth Group shares issued in the acquisition, the amortization of finite-lived intangible assets arising from the preliminary purchase price allocation, interest expense related to financing the cash portion of the purchase price and the associated income tax effects of the pro forma adjustments. Because the unaudited pro forma financial information has been prepared based on preliminary estimates of fair values, the actual amounts recorded as of the completion of the purchase price allocation may differ materially from the information presented below. The unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations that would have occurred had the MAMSI acquisition been consummated at the beginning of the respective periods.
For the Three Months Ended March 31, |
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Proforma unaudited |
2004
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2003
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(in millions, except per share data) | ||||||
Revenues |
$ | 8,436 | $ | 7,604 | ||
Net Earnings |
$ | 576 | $ | 431 | ||
Earnings Per Share |
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Basic |
$ | 0.93 | $ | 0.68 | ||
Diluted |
$ | 0.89 | $ | 0.65 |
4. Cash, Cash Equivalents and Investments
As of March 31, 2004, the amortized cost, gross unrealized gains and losses, and fair value of cash, cash equivalents and investments were as follows (in millions):
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
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Cash and Cash Equivalents |
$ | 2,714 | $ | | $ | | $ | 2,714 | |||||
Debt Securities Available for Sale |
6,845 | 296 | (4 | ) | 7,137 | ||||||||
Equity Securities Available for Sale |
193 | 8 | (1 | ) | 200 | ||||||||
Debt Securities Held to Maturity |
128 | | | 128 | |||||||||
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Total Cash and Investments |
$ | 9,880 | $ | 304 | $ | (5 | ) | $ | 10,179 | ||||
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During the three month periods ended March 31, we recorded realized gains and losses on the sale of investments, excluding the UnitedHealth Capital dispositions described below, as follows (in millions):
2004
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2003
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Gross Realized Gains |
$ | 7 | $ | 8 | |||
Gross Realized Losses |
| (7 | ) | ||||
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Net Realized Gains |
$ | 7 | $ | 1 | |||
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In addition, during the first quarter of 2004, we realized a capital gain of $25 million on the sale of certain UnitedHealth Capital investments. With the proceeds from this sale, we made a cash contribution of $25 million to the United Health Foundation in the first quarter of 2004. The realized gain of $25 million and the related contribution expense of $25 million are included in Investment and Other Income in the accompanying Condensed Consolidated Statement of Operations.
8
UNITEDHEALTH GROUP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill, by operating segment, for the three months ended March 31, 2003 and 2004, were as follows (in millions):
Health Care Services |
Uniprise
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Specialized Care Services |
Ingenix
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Consolidated Total |
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Balance at December 31, 2002 |
$ | 1,693 | $ | 698 | $ | 363 | $ | 609 | $ | 3,363 | |||||
Acquisitions and Subsequent Payments |
4 | | | | 4 | ||||||||||
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Balance at March 31, 2003 |
$ | 1,697 | $ | 698 | $ | 363 | $ | 609 | $ | 3,367 | |||||
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Health Care Services |
Uniprise
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Specialized Care Services |
Ingenix
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Consolidated Total |
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Balance at December 31, 2003 |
$ | 1,770 | $ | 698 | $ | 409 | $ | 632 | $ | 3,509 | |||||
Acquisitions and Subsequent Payments |
1,935 | | | 2 | 1,937 | ||||||||||
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Balance at March 31, 2004 |
$ | 3,705 | $ | 698 | $ | 409 | $ | 634 | $ | 5,446 | |||||
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The weighted-average useful life, gross carrying value, accumulated amortization and net carrying value of other intangible assets as of March 31, 2004 and December 31, 2003 were as follows (in millions):
March 31, 2004
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December 31, 2003
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Weighted- Average Useful Life |
Gross Carrying Value |
Accumulated Amortization |
Net Carrying Value |
Gross Carrying Value |
Accumulated Amortization |
Net Carrying Value |
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Customer Contracts and Membership Lists |
16 years | $ | 445 | $ | (9 | ) | $ | 436 | $ | 93 | $ | (6 | ) | $ | 87 | |||||||
Patents, Trademarks and Technology |
9 years | 66 | (28 | ) | 38 | 73 | (26 | ) | 47 | |||||||||||||
Other |
14 years | 70 | (13 | ) | 57 | 57 | (11 | ) | 46 | |||||||||||||
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Total |
14 years | $ | 581 | $ | (50 | ) | $ | 531 | $ | 223 | $ | (43 | ) | $ | 180 | |||||||
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Amortization expense relating to other intangible assets was approximately $8 million and $4 million for the three months ended March 31, 2004 and 2003, respectively. Estimated amortization expense relating to other intangible assets for the years ending December 31 are as follows (in millions):
2004 |
2005 |
2006 |
2007 |
2008 |
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$39 |
$42 |
$41 |
$40 |
$37 |
6. Medical Costs and Medical Costs Payable
Medical costs and medical costs payable include estimates of our obligations for medical care services that have been rendered on behalf of insured consumers but for which claims have either not yet been received or processed, and for liabilities for physician, hospital and other medical cost disputes. We develop estimates for medical costs incurred but not reported using an actuarial process that is consistently applied, centrally controlled and automated. The actuarial models consider factors such as time from date of service to claim receipt, claim backlogs, care provider contract rate changes, medical care consumption and other medical cost trends. Each
9
UNITEDHEALTH GROUP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
period, we re-examine previously established medical costs payable estimates based on actual claim submissions and other changes in facts and circumstances. As the liability estimates recorded in prior periods become more exact, we increase or decrease the amount of the estimates, with the changes in estimates included in medical costs in the period in which the change is identified. In every reporting period, our operating results include the effects of more completely developed medical costs payable estimates associated with previously reported periods.
Our medical costs payable estimates as of December 31, 2003 developed favorably by approximately $90 million ($58 million net of taxes) in the first quarter of 2004. Our medical costs payable estimates as of December 31, 2002 developed favorably by approximately $60 million ($38 million net of taxes) in the first quarter of 2003. Management believes the amount of medical costs payable is reasonable and adequate to cover the companys liability for unpaid claims as of March 31, 2004.
7. Commercial Paper and Debt
Commercial paper and debt consisted of the following (in millions):
March 31, 2004
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December 31, 2003
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Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
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Commercial Paper |
$ | | $ | | $ | 79 | $ | 79 | ||||||||
Floating-Rate Notes due November 2004 |
150 | 150 | 150 | 150 | ||||||||||||
7.5% Senior Unsecured Notes due November 2005 |
400 | 436 | 400 | 438 | ||||||||||||
5.2% Senior Unsecured Notes due January 2007 |
400 | 429 | 400 | 427 | ||||||||||||
3.3% Senior Unsecured Notes due January 2008 |
500 | 507 | 500 | 499 | ||||||||||||
3.8% Senior Unsecured Notes due February 2009 |
250 | 250 | | | ||||||||||||
4.9% Senior Unsecured Notes due April 2013 |
450 | 463 | 450 | 454 | ||||||||||||
4.8% Senior Unsecured Notes due February 2014 |
250 | 252 | | | ||||||||||||
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Total Commercial Paper and Debt |
2,400 | 2,487 | 1,979 | 2,047 | ||||||||||||
Less Current Maturities |
(150 | ) | (150 | ) | (229 | ) | (229 | ) | ||||||||
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Long-Term Debt, less current maturities |
$ | 2,250 | $ | 2,337 | $ | 1,750 | $ | 1,818 | ||||||||
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The interest rates on our November 2004 floating-rate notes are reset quarterly to the three-month LIBOR (London Interbank Offered Rate) plus 0.6%. As of March 31, 2004, the applicable rate on the notes was 1.7%.
In February 2004, we issued $250 million of 3.8% fixed-rate notes due February 2009 and $250 million of 4.8% fixed-rate notes due February 2014 to finance a majority of the cash portion of the MAMSI purchase price as described in Note 3. In December 2003, we issued $500 million of 3.3% fixed-rate notes due January 2008, and in March 2003, we issued $450 million of 4.9% fixed-rate notes due April 2013. We used the proceeds from these borrowings to repay commercial paper and term debt maturing in 2003, and for general corporate purposes including working capital, business acquisitions and share repurchases. We have interest rate swap agreements that qualify as fair value hedges to convert a portion of our interest rate exposure from a fixed to a variable rate. The interest rate swap agreements have aggregate notional amounts of $1.4 billion with variable rates that are benchmarked to the six-month LIBOR rate and are reset on a semiannual basis in arrears. At March 31, 2004, the rate used to accrue interest expense on these agreements ranged from 1.0% to 1.4%. The differential between the fixed and variable rates to be paid or received is accrued and recognized over the life of the agreements as an adjustment to interest expense in the Condensed Consolidated Statements of Operations.
10
UNITEDHEALTH GROUP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We have credit arrangements for $900 million that support our commercial paper program. These credit arrangements include a $450 million revolving facility that expires in July 2005, and a $450 million, 364-day facility that expires in July 2004. As of March 31, 2004, we had no amounts outstanding under our credit facilities. Our debt arrangements and credit facilities contain various covenants, the most restrictive of which require us to maintain a debt-to-total-capital ratio below 45% and to exceed specified minimum interest coverage levels. We are in compliance with the requirements of all debt covenants.
8. AARP
In January 1998, we initiated a 10-year contract to provide health insurance products and services to members of AARP. Under the terms of the contract, we are compensated for transaction processing and other services as well as for assuming underwriting risk. We are also engaged in product development activities to complement the insurance offerings under this program. Premium revenues from our portion of the AARP insurance offerings are approximately $4.1 billion annually.
The underwriting gains or losses related to the AARP business are directly recorded as an increase or decrease to a rate stabilization fund (RSF). The primary components of the underwriting results are premium revenue, medical costs, investment income, administrative expenses, member services expenses, marketing expenses and premium taxes. Underwriting gains and losses are recorded as an increase or decrease to the RSF and accrue to AARP policyholders, unless cumulative net losses were to exceed the balance in the RSF. To the extent underwriting losses exceed the balance in the RSF, we would have to fund the deficit. Any deficit we fund could be recovered by underwriting gains in future periods of the contract. To date, we have not been required to fund any underwriting deficits. The RSF balance is reported in Other Policy Liabilities in the accompanying Condensed Consolidated Balance Sheets. We believe the RSF balance is sufficient to cover potential future underwriting or other risks associated with the contract.
The following AARP program-related assets and liabilities are included in our Condensed Consolidated Balance Sheets (in millions):
Balance as of
|
||||||
March 31, 2004 |
December 31, 2003 |
|||||
Accounts Receivable |
$ | 372 | $ | 352 | ||
Assets Under Management |
$ | 1,950 | $ | 1,959 | ||
Medical Costs Payable |
$ | 894 | $ | 874 | ||
Other Policy Liabilities |
$ | 1,263 | $ | 1,275 | ||
Other Current Liabilities |
$ | 165 | $ | 162 |
The effects of changes in balance sheet amounts associated with the AARP program accrue to AARP policyholders through the RSF balance. Accordingly, we do not include the effect of such changes in our Condensed Consolidated Statements of Cash Flows.
9. Stock Repurchase Program
Under our board of directors authorization, we maintain a common stock repurchase program. Repurchases may be made from time to time at prevailing prices, subject to restrictions on volume, pricing and timing. During the three months ended March 31, 2004, we repurchased 10.4 million shares through this program at an average price of approximately $61 per share and at an aggregate cost of $630 million. As of March 31, 2004, we had board of directors authorization to purchase up to an additional 34.8 million shares of our common stock.
11
UNITEDHEALTH GROUP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Comprehensive Income
The table below presents comprehensive income, defined as changes in the equity of our business excluding changes resulting from investments by and distributions to our shareholders, for the three month periods ended March 31 (in millions):
2004
|
2003
|
|||||
Net Earnings |
$ | 554 | $ | 403 | ||
Change in Net Unrealized Gains on Investments, net of tax effects |
45 | 2 | ||||
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Comprehensive Income |
$ | 599 | $ | 405 | ||
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11. Segment Financial Information
The following is a description of the types of products and services from which each of our business segments derives its revenues:
| Health Care Services consists of the UnitedHealthcare, Ovations and AmeriChoice businesses. UnitedHealthcare coordinates network-based health and well-being services on behalf of local employers and consumers. Ovations delivers health and well-being services for Americans over the age of 50. AmeriChoice facilitates and manages health care services for state Medicaid programs and their beneficiaries. The financial results of UnitedHealthcare, Ovations and AmeriChoice have been combined in the Health Care Services segment column in the tables presented below because these businesses have similar economic characteristics and have similar products and services, types of customers, distribution methods and operational processes, and operate in a similar regulatory environment, typically within the same legal entity. |
| Uniprise provides network-based health and well-being access and services, business-to-business transaction processing services, consumer connectivity and technology support services to large employers and health plans. |
| Specialized Care Services is a portfolio of health and well-being companies, each serving a specialized market need with an offering of benefits, networks, services and resources. |
| Ingenix is a leader in the field of health care information serving pharmaceutical, biotechnology and medical device companies, health insurers and other payers, physicians and other health care providers, large employers and government agencies. |
Transactions between business segments principally consist of customer service and transaction processing services Uniprise provides to Health Care Services, certain product offerings sold to Uniprise and Health Care Services customers by Specialized Care Services, and sales of medical benefits cost, quality and utilization data and predictive modeling to Health Care Services and Uniprise by Ingenix. These transactions are recorded at managements best estimate of fair value, as if the services were purchased from or sold to third parties. All intersegment transactions are eliminated in consolidation. Assets and liabilities that are jointly used are assigned to each segment using estimates of pro-rata usage. Cash and investments are assigned such that each segment has minimum specified levels of regulatory capital or working capital for non-regulated businesses. The Eliminations column includes eliminations of inter-segment transactions.
12
UNITEDHEALTH GROUP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents segment financial information for the three month periods ended March 31, 2004 and 2003 (in millions):
First Quarter 2004 |
Health Care Services |
Uniprise
|
Specialized Care Services |
Ingenix
|
Eliminations
|
Consolidated
|
|||||||||||||
Revenues External Customers |
$ | 6,972 | $ | 666 | $ | 324 | $ | 91 | $ | | $ | 8,053 | |||||||
Revenues Intersegment |
| 161 | 225 | 49 | (435 | ) | | ||||||||||||
Investment and Other Income |
78 | 8 | 5 | | | 91 | |||||||||||||
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Total Revenues |
$ | 7,050 | $ | 835 | $ | 554 | $ | 140 | $ | (435 | ) | $ | 8,144 | ||||||
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|||||||
Earnings from Operations |
$ | 577 | $ | 167 | $ | 113 | $ | 19 | $ | | $ | 876 | |||||||
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First Quarter 2003 |
Health Care Services |
Uniprise
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Specialized Care Services |
Ingenix
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Eliminations
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Consolidated
|
|||||||||||||
Revenues External Customers |
$ | 5,967 | $ | 614 | $ | 255 | $ | 82 | $ | | $ | 6,918 | |||||||
Revenues Intersegment |
| 148 | 196 | 39 | (383 | ) | | ||||||||||||
Investment and Other Income |
47 | 7 | 3 | | | 57 | |||||||||||||
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Total Revenues |
$ | 6,014 | $ | 769 | $ | 454 | $ | 121 | $ | (383 | ) | $ | 6,975 | ||||||
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|||||||
Earnings from Operations |
$ | 402 | $ | 152 | $ | 88 | $ | 11 | $ | | $ | 653 | |||||||
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12. Commitments and Contingencies
Legal Matters
Because of the nature of our businesses, we are routinely party to a variety of legal actions related to the design, management and offerings of our services. We record liabilities for our estimates of probable costs resulting from these matters. These matters include, but are not limited to: claims relating to health care benefits coverage, medical malpractice actions, contract disputes and claims related to disclosure of certain business practices. Following the events of September 11, 2001, the cost of business insurance coverage increased significantly. As a result, we have increased the amount of risk that we self-insure, particularly with respect to matters incidental to our business.
Beginning in 1999, a series of class action lawsuits were filed against us and virtually all major entities in the health benefits business. Generally, the health care provider plaintiffs allege violations of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and the Racketeer Influenced Corrupt Organization Act (RICO), as well as several state law claims. The suit seeks injunctive, compensatory and equitable relief as well as restitution, costs, fees and interest payments. We are engaged in discovery in this matter. A trial date has been set for March 14, 2005.
In March 2000, the American Medical Association filed a lawsuit against the company in connection with the calculation of reasonable and customary reimbursement rates for non-network providers. The suit seeks declaratory, injunctive and compensatory relief as well as costs, fees and interest payments. An amended complaint was filed on August 25, 2000, which alleged two classes of plaintiffs, an ERISA class and a non-ERISA class. After the court dismissed certain ERISA claims and the claims brought by the American Medical Association, a third amended complaint was filed. On October 25, 2002, the court granted in part and denied in part our motion to dismiss the third amended complaint. We are engaged in discovery in this matter.
13
UNITEDHEALTH GROUP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Although the results of pending litigation are always uncertain, we do not believe the results of any such actions currently threatened or pending, including those described above, will, individually or in aggregate, have a material adverse effect on our consolidated financial position or results of operations.
Government Regulation
Our business is regulated at federal, state, local and international levels. The laws and rules governing our business and interpretations of those laws and rules are subject to frequent change. Broad latitude is given to the agencies administering those regulations. State legislatures and Congress continue to focus on health care issues as the subject of proposed legislation. Existing or future laws and rules could force us to change how we do business, restrict revenue and enrollment growth, increase our health care and administrative costs and capital requirements, and increase our liability in federal and state courts for coverage determinations, contract interpretation and other actions. Further, we must obtain and maintain regulatory approvals to market many of our products.
We are also subject to various ongoing governmental investigations, audits and reviews, and we record liabilities for our estimate of probable costs resulting from these matters. Although the results of pending matters are always uncertain, we do not believe the results of any of the current investigations, audits or reviews, individually or in the aggregate, will have a material adverse effect on our consolidated financial position or results of operations.
13. Recently Issued Accounting Standards
In January 2003, the FASB issued Interpretation (FIN) No. 46, Consolidation of Variable Interest Entities an Interpretation of ARB No. 51. FIN No. 46, as revised in December 2003, requires an enterprise to consolidate a variable interest entity if that enterprise has a variable interest that will absorb a majority of the entitys expected losses, receive a majority of the entitys expected residual returns, or both. The adoption of FIN No. 46 did not have any impact on our consolidated financial position or results of operations.
14
INDEPENDENT ACCOUNTANTS REPORT
To the Board of Directors and Shareholders
UnitedHealth Group Incorporated
Minnetonka, Minnesota
We have reviewed the accompanying condensed consolidated balance sheet of UnitedHealth Group Incorporated and Subsidiaries (the Company) as of March 31, 2004, and the related condensed consolidated statements of operations and cash flows for the three-month period ended March 31, 2004. These condensed consolidated financial statements are the responsibility of the Companys management.
We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of UnitedHealth Group Incorporated and Subsidiaries as of December 31, 2003, and the related consolidated statements of operations, shareholders equity, and cash flows for the year then ended (not presented herein); and in our report dated February 10, 2004, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2003 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ D ELOITTE & T OUCHE LLP
Minneapolis, Minnesota
April 30, 2004
15
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read together with the accompanying unaudited condensed consolidated financial statements and notes. In addition, the following discussion should be considered in light of a number of factors that affect the Company, the industry in which we operate, and business generally. These factors are described in Exhibit 99 to this Quarterly Report.
Summary highlights of our first quarter 2004 results include:
| Diluted net earnings per common share of $0.88, an increase of 35% from $0.65 per share reported in the first quarter of 2003 and an increase of 6% from $0.83 per share reported in the fourth quarter of 2003. |
| Cash flows from operations of $910 million, an increase of 26% compared to $725 million for the first quarter of 2003. |
| Earnings from operations of $876 million, up $223 million, or 34%, over the prior year and up $66 million, or 8%, sequentially over the fourth quarter of 2003. |
| Consolidated revenues of $8.1 billion increased $1.2 billion, or 17%, over the first quarter of 2003. Excluding the impact of acquisitions, consolidated revenues increased by approximately 8% over the prior year. |
| The consolidated medical care ratio of 80.8% declined from 82.1% in the first quarter of 2003. |
| The operating cost ratio of 16.2% improved from 17.2% during the first quarter of 2003. |
| Consolidated operating margin of 10.8% improved 140 basis points from 9.4% in the first quarter of 2003. |
Three Months Ended March 31, |
|||||||||||
(In millions, except per share data) |
2004
|
2003
|
Percent
Change |
||||||||
Total Revenues |
$ | 8,144 | $ | 6,975 | 17 | % | |||||
Earnings from Operations |
$ | 876 | $ | 653 | 34 | % | |||||
Net Earnings |
$ | 554 | $ | 403 | 37 | % | |||||
Diluted Net Earnings Per Common Share |
$ | 0.88 | $ | 0.65 | 35 | % | |||||
Medical Care Ratio |
80.8 | % | 82.1 | % | |||||||
Medical Care Ratio, excluding AARP |
79.5 | % | 81.0 | % | |||||||
Operating Cost Ratio |
16.2 | % | 17.2 | % | |||||||
Return on Equity (annualized) |
35.9 | % | 36.3 | % | |||||||
Operating Margin |
10.8 | % | 9.4 | % |
Results of Operations
Consolidated Financial Results
Revenues
Revenues are comprised of premium revenues from risk-based products; service revenues, which primarily include fees for management, administrative and consulting services; and investment and other income.
Premium revenues are primarily derived from risk-based health insurance arrangements in which the premium is fixed, typically for a one-year period, and we assume the economic risk of funding our customers health care
16
services and related administrative costs. Service revenues consist primarily of fees derived from services performed for customers that self-insure the medical costs of their employees and their dependents. For both premium risk-based and fee-based customer arrangements, we provide coordination and facilitation of medical services, transaction processing, customer, consumer and care provider services, and access to contracted networks of physicians, hospitals and other health care professionals.
Consolidated revenues increased by nearly $1.2 billion, or 17%, year-over-year in the first quarter of 2003 to over $8.1 billion. Consolidated revenues increased by 8% as a result of rate increases on premium and fee-based services and growth across business segments, and 9% as a result of revenues from businesses acquired since the first quarter of 2003. Following is a discussion of first quarter consolidated revenue trends for each of our three revenue components.
Premium Revenues
Consolidated premium revenues totaled $7.3 billion in the first quarter of 2004, an increase of $1.1 billion, or 18%, over the first quarter of 2003. Excluding the impact of acquisitions, consolidated premium revenues increased by approximately 8% over the prior year.
UnitedHealthcare premium revenues increased by $768 million, or 22%, to $4.3 billion in the first quarter of 2004. Excluding premium revenues from Mid Atlantic Medical Services, Inc. (MAMSI) and Golden Rule Financial Corporation (Golden Rule) which were acquired since the first quarter of 2003, UnitedHealthcare premium revenues increased by approximately 6%. This increase is primarily due to average net premium rate increases of approximately 9% to 10% on UnitedHealthcares renewing commercial risk-based business partially offset by a decrease in the number of individuals served by risk-based products. Ovations premium revenues increased by 11% in the first quarter of 2004 driven by an increase in the number of individuals served by Medicare supplement products provided to AARP members and by Medicare Advantage products, and the related average net premium rate increases. Premium revenues from AmeriChoice Medicaid programs increased by $95 million, or 15%, in the first quarter of 2004 mainly driven by an increase in the number of individuals served. The remaining premium revenue increase is due mainly to strong growth in several of Specialized Care Services businesses.
Service Revenues
Service revenues during the first quarter of 2004 totaled $789 million, an increase of $19 million, or 2%, over the first quarter of 2003. The increase in service revenues was driven primarily by aggregate growth of approximately 3% in the number of individuals served by Uniprise and UnitedHealthcare under fee-based arrangements, excluding the impact of acquisitions.
Investment and Other Income
Investment and other income during the first quarter of 2004 totaled $91 million, representing an increase of $34 million from the comparable period in 2003. Interest income increased by $28 million mainly due to the impact of increased levels of cash and fixed-income investments from the acquisitions of Golden Rule and MAMSI. Net capital gains on sales of investments were $7 million in the first quarter of 2004 compared with $1 million in the first quarter of 2003.
Medical Costs
The combination of pricing, benefit designs, consumer health care utilization and comprehensive care facilitation efforts is reflected in the medical care ratio (medical costs as a percentage of premium revenues).
17
The consolidated medical care ratio decreased from 82.1% in the first quarter of 2003 to 80.8% in the first quarter of 2004. Excluding the AARP business, 1 the medical care ratio decreased 150 basis points from 81.0% in the first quarter of 2003 to 79.5% in the first of quarter 2004. Approximately 30 basis points of the decrease in the medical care ratio was driven by favorable development of prior period medical cost estimates as further discussed below. The balance of the medical care ratio decrease resulted primarily from net premium rate increases that exceeded overall medical benefit cost increases and changes in product, business and customer mix.
Each period, our operating results include the effects of revisions in medical cost estimates related to all prior periods. Changes in medical cost estimates related to prior periods that are identified in the current period are included in total medical costs reported for the current period. Medical costs for the first quarter of 2004 include approximately $90 million of favorable medical cost development related to prior fiscal years. Medical costs for the first quarter of 2003 include approximately $60 million of favorable medical cost development related to prior fiscal years.
On an absolute dollar basis, first quarter 2004 medical costs increased $819 million, or 16%, over the comparable 2003 period. The increase was driven primarily by a rise in medical costs of approximately 9% to 10% due to medical cost inflation and a moderate increase in health care consumption, and incremental medical costs related to businesses acquired since the first quarter of 2003.
Operating Costs
The operating cost ratio (operating costs as a percentage of total revenues) for the first quarter of 2004 was 16.2%, down from 17.2% in the comparable 2003 period. This decrease was driven primarily by revenue mix changes, with greater growth from premium revenues than from service revenues. Our premium-based products have lower operating cost ratios than our fee-based products. Additionally, the decrease in the operating cost ratio reflects productivity gains from technology deployment and other cost management initiatives.
On an absolute dollar basis, operating costs for the first quarter of 2004 increased $118 million, or 10%, over the first quarter of 2003. This increase was driven by an 8% increase in total individuals served by Health Care Services and Uniprise during the first quarter of 2004 compared to the comparable 2003 period, increases in broker commissions and premium taxes due to increased revenues, general operating cost inflation and additional operating costs associated with acquired businesses.
Depreciation and Amortization
Depreciation and amortization was $82 million and $73 million for the three month periods ended March 31, 2004 and 2003, respectively. The $9 million increase is due to additional depreciation and amortization resulting from higher levels of computer equipment, capitalized software and intangible assets as a result of technology enhancements, business growth and businesses acquired since the first quarter of 2003.
Income Taxes
Our effective income tax rate was 35.0% in the first quarter of 2004 and 36.0% in the first quarter of 2003. The decrease is mainly driven by changes in business and income mix between states with differing income tax rates.
1 Management believes disclosure of the medical care ratio excluding the AARP business is meaningful since underwriting gains or losses related to the AARP business accrue to AARP policyholders through a rate stabilization fund (RSF). Although the Company is at risk for underwriting losses to the extent cumulative net losses exceed the balance in the RSF, the Company has not been required to fund any underwriting deficits to date and management believes the RSF balance is sufficient to cover potential future underwriting or other risks associated with the contract during the foreseeable future.
18
Business Segments
The following summarizes the operating results of our business segments for three month periods ended March 31 (in millions):
Revenues
Three Months Ended March 31, |
|||||||||||
2004
|
2003
|
Percent
Change |
|||||||||
Health Care Services |
$ | 7,050 | $ | 6,014 | 17 | % | |||||
Uniprise |
835 | 769 | 9 | % | |||||||
Specialized Care Services |
554 | 454 | 22 | % | |||||||
Ingenix |
140 | 121 | 16 | % | |||||||
Eliminations |
(435 | ) | (383 | ) | n/a | ||||||
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Consolidated Revenues |
$ | 8,144 | $ | 6,975 | 17 | % | |||||
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Earnings from Operations
Three Months Ended
March 31, |
|||||||||
2004
|
2003
|
Percent
Change |
|||||||
Health Care Services |
$ | 577 | $ | 402 | 44 | % | |||
Uniprise |
167 | 152 | 10 | % | |||||
Specialized Care Services |
113 | 88 | 28 | % | |||||
Ingenix |
19 | 11 | 73 | % | |||||
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Consolidated Earnings from Operations |
$ | 876 | $ | 653 | 34 | % | |||
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Health Care Services
The Health Care Services segment, comprised of the UnitedHealthcare, Ovations and AmeriChoice businesses, had first quarter 2004 revenues of nearly $7.1 billion, representing an increase of $1.0 billion, or 17%, over the first quarter of 2003. Excluding the impact of acquisitions, Health Care Services revenues increased by approximately 7%.
The increase in revenues primarily resulted from an increase of $768 million in UnitedHealthcare premium revenues due mainly to the premium revenues from the MAMSI and Golden Rule acquisitions since the first quarter of 2003 and average net premium rate increases of approximately 9% to 10% on UnitedHealthcares renewing commercial risk-based business, partially offset by a decrease in the number of individuals served by risk-based products. The remaining increase in Health Care Services revenues is largely due to growth in the number of individuals served by UnitedHealthcare fee-based products, Ovations Medicare supplement products provided to AARP members, Ovations Medicare Advantage products, and AmeriChoice Medicaid products, as well as annual rate increases on these products.
The Health Care Services segment had earnings from operations of $577 million, representing an increase of $175 million, or 44%, over the first quarter of 2003. This increase primarily resulted from revenue growth and improved gross margins on UnitedHealthcares risk-based products, growth in the number of individuals served by UnitedHealthcares higher-margin fee-based products, and the acquisitions of MAMSI and Golden Rule since
19
the first quarter of 2003. UnitedHealthcares commercial medical care ratio improved to 79.3% in the first quarter of 2004 from 81.5% in 2003. Approximately 60 basis points of the decrease in the commercial medical care ratio was driven by the favorable development of prior period medical cost estimates, with the balance of the decrease resulting from net premium rate increases that exceeded overall medical benefit cost increases and changes in business and customer mix. Health Care Services first quarter 2004 operating margin was 8.2%, an increase of 150 basis points over the first quarter of 2003 driven mainly by improved medical care ratios and a shift in UnitedHealthcares product mix from risk-based products to higher-margin fee-based products.
The following table summarizes individuals served by Health Care Services, by major market segment and funding arrangement, as of March 31 (in thousands) 1 :
2004
|
2003
|
|||
Commercial |
||||
Risk-based |
6,200 | 4,995 | ||
Fee-based |
3,045 | 2,805 | ||
|
|
|||
Total Commercial |
9,245 | 7,800 | ||
Medicare |
235 | 225 | ||
Medicaid |
1,220 | 1,045 | ||
|
|
|||
Total Health Care Services |
10,700 | 9,070 | ||
|
|
1 | Excludes individuals served by Ovations Medicare supplement products to AARP members. |
The number of individuals served by UnitedHealthcares commercial business as of March 31, 2004 exceeded 9.2 million, an increase of approximately 1.4 million, or 19%, over the first quarter of 2003. Excluding the acquisitions of MAMSI, Golden Rule and a smaller regional health plan, the number of individuals served by UnitedHealthcares commercial business was essentially flat. An increase of approximately 150,000 in the number of individuals served with commercial fee-based products, driven by new customer relationships and customers converting from risk-based products to fee-based products, was offset by a comparable decrease in the number of individuals served by risk-based products, resulting from customers converting to self-funded, fee-based arrangements and a competitive commercial risk-based pricing environment.
Ovations Medicare Advantage enrollment was 235,000 as of March 31, 2004, an increase of 10,000, or 4%, from the first quarter of 2003. Medicaid enrollment increased by 175,000, or 17%, due to strong organic growth in the number of individuals served by AmeriChoice and the acquisition of a Medicaid health plan in Michigan in February 2004, resulting in the addition of approximately 95,000 individuals served.
Uniprise
Uniprise revenues in the first quarter of 2004 were $835 million, representing an increase of $66 million, or 9%, over the 2003 comparable period. This increase was driven primarily by growth of 4% in the number of individuals served by Uniprise during the first quarter of 2004 over the first quarter of 2003 and annual rate increases. Uniprise served 9.5 million individuals and 9.3 million individuals as of March 31, 2004 and 2003, respectively.
Uniprise first quarter 2004 earnings from operations were $167 million, an increase of $15 million, or 10%, over the first quarter of 2003. Operating margin improved to 20.0% in the first quarter of 2004 from 19.8% in the comparable 2003 period. Uniprise has expanded its operating margin through operating cost efficiencies derived from process improvements, technology deployment and cost management initiatives that have reduced labor and occupancy costs in its transaction processing and customer service, billing and enrollment functions.
20
Specialized Care Services
Specialized Care Services had revenues of $554 million in the first quarter of 2004, an increase of $100 million, or 22%, over the comparable 2003 period. This increase was principally driven by a 10% increase in the number of individuals served by its specialty benefit businesses as well as rate increases related to these businesses and approximately $20 million of revenues related to businesses acquired since the first quarter of 2003.
Earnings from operations in the first quarter of 2004 of $113 million increased $25 million, or 28%, over the first quarter of 2003. Specialized Care Services operating margin increased to 20.4% in the first quarter of 2004, up from 19.4% in the comparable 2003 period. This increase was driven primarily by operational and productivity improvements within several of Specialized Care Services businesses. With the continuing growth of the Specialized Care Services segment, we are consolidating production and service operations to a segmentwide service and production infrastructure to improve service, quality and consistency, and to enhance productivity and efficiency.
Ingenix
Ingenix revenues in the first quarter of 2004 of $140 million increased by $19 million, or 16%, over the comparable 2003 period. Earnings from operations were $19 million in the first quarter of 2004, up $8 million, or 73%, from the comparable 2003 period. The operating margin was 13.6% in the first quarter of 2004, up from 9.1% in the first quarter of 2003. These increases were driven by growth and expanding margins in the health information and clinical research businesses. Ingenix typically generates higher revenues and operating margins in the second half of the year due to seasonally strong demand for higher margin health information products.
Financial Condition and Liquidity at March 31, 2004
Liquidity
We manage our cash, investments and capital structure so we are able to meet the short- and long-term obligations of our business while maintaining strong financial flexibility and liquidity. We forecast, analyze and monitor our cash flows to enable prudent investment and financing within the confines of our financial strategy.
Our regulated subsidiaries generate significant cash flows from operations. A majority of the assets held by our regulated subsidiaries are in the form of cash, cash equivalents and investments. After considering expected cash flows from operating activities, we generally invest monies of regulated subsidiaries that exceed our short-term obligations in longer term, investment-grade, marketable debt securities to improve our overall investment return. Factors we consider in making these investment decisions include our board of directors approved investment policy, regulatory limitations, return objectives, tax implications, risk tolerance and maturity dates. Our long-term investments are also available for sale to meet short-term liquidity and other needs. Monies in excess of the capital needs of our regulated entities are paid to their non-regulated parent companies, typically in the form of dividends, for general corporate use, when and as permitted by applicable regulations.
Our non-regulated businesses also generate significant cash from operations for general corporate use. Cash flows generated by these entities, combined with the issuance of commercial paper, long-term debt and the availability of committed credit facilities, further strengthens our operating and financial flexibility. We generally use these cash flows to reinvest in our businesses in the form of capital expenditures, to expand the depth and breadth of our services through business acquisitions, and to repurchase shares of our common stock, depending on market conditions.
Cash generated from operating activities, our primary source of liquidity, is principally from net earnings, excluding depreciation and amortization. As a result, any future decline in our profitability may have a negative impact on our liquidity. The level of profitability of our risk-based business depends in large part on our ability to
21
accurately predict and price for health care cost increases. This risk is partially mitigated by the diversity of our other businesses, the geographic diversity of our risk-based business and our disciplined underwriting and pricing processes, which seek to match premium rate increases with future health care costs. In 2003, a hypothetical 1% increase in commercial insured medical costs would have reduced net earnings by approximately $75 million.
The availability of financing in the form of debt or equity is influenced by many factors, including our profitability, operating cash flows, debt levels, debt ratings, contractual restrictions, regulatory requirements and market conditions. We believe that our strategies and actions toward maintaining financial flexibility mitigate much of this risk.
Cash and Investments
Cash flows from operating activities was $910 million in the first quarter of 2004, representing an increase over the comparable 2003 period of $185 million, or 26%. This increase in operating cash flows resulted primarily from an increase of $174 million in net income excluding depreciation, amortization and other noncash items. Operating cash flows increased by $9 million due to cash generated by working capital changes. As premium revenues and related medical costs increase, we typically generate incremental operating cash flows because we collect premium revenues in advance of the claim payments for related medical costs.
We maintained a strong financial condition and liquidity position, with cash and investments of $10.2 billion at March 31, 2004. Total cash and investments increased by $702 million since December 31, 2003, primarily due to cash and investments acquired in the MAMSI acquisition in February 2004 and strong operating cash flows, partially offset by capital expenditures, cash paid for business acquisitions and common stock repurchases.
As further described under Regulatory Capital and Dividend Restrictions, many of our subsidiaries are subject to various government regulations that restrict the timing and amount of dividends and other distributions that may be paid to their parent companies. At March 31, 2004, approximately $530 million of our $10.2 billion of cash and investments was held by non-regulated subsidiaries and was available for general corporate use, including acquisitions and share repurchases.
Financing and Investing Activities
In addition to our strong cash flows generated by operating activities, we use commercial paper and debt to maintain adequate operating and financial flexibility. As of March 31, 2004 and December 31, 2003, we had commercial paper and debt outstanding of approximately $2.4 billion and $2.0 billion, respectively. Our debt-to-total-capital ratio was 24.9% and 27.8% as of March 31, 2004 and December 31, 2003, respectively. We believe the prudent use of debt leverage optimizes our cost of capital and return on shareholders equity, while maintaining appropriate liquidity.
On April 26, 2004, the Company entered into a definitive agreement to acquire Oxford Health Plans, Inc. (Oxford). Under the terms of the agreement, Oxford shareholders will receive 0.6357 shares of UnitedHealth Group common stock and $16.17 in cash for each share of Oxford common stock they own. Total consideration for the transaction, to be issued upon closing, is comprised of approximately 51.8 million shares of UnitedHealth Group common stock (valued at approximately $3.4 billion based upon the average of UnitedHealth Groups share closing price for two days before, the day of and two days after the acquisition announcement date of April 26, 2004), approximately $1.3 billion in cash and UnitedHealth Group vested common stock options with an estimated fair value of $285 million to be issued in exchange for Oxfords outstanding vested common stock options. Under the purchase method of accounting, the total purchase price will be allocated to the net tangible and intangible assets of Oxford based on their estimated fair values at the closing of the transaction. Pending regulatory and Oxford shareholder approvals, we expect this transaction will close in the fourth quarter of 2004.
On February 10, 2004, our Health Care Services business segment acquired Mid Atlantic Medical Services, Inc. (MAMSI). Under the terms of the purchase agreement, MAMSI shareholders received 0.82 shares of UnitedHealth Group common stock and $18 in cash for each share of MAMSI common stock they owned. Total
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consideration issued was approximately $2.7 billion, comprised of 36.4 million shares of UnitedHealth Group common stock (valued at $1.9 billion based upon the average of UnitedHealth Groups share closing price for two days before, the day of and two days after the acquisition announcement date of October 27, 2003) and approximately $800 million in cash.
In February 2004, we issued $250 million of 3.8% fixed-rate notes due February 2009 and $250 million of 4.8% fixed-rate notes due February 2014. In December and March 2003, we issued $500 million of four-year, fixed-rate notes and $450 million of 10-year, fixed-rate notes with interest rates of 3.3% and 4.9%, respectively. We entered into interest rate swap agreements to convert our interest exposure on a majority of these 2003 and 2004 borrowings from a fixed to a variable rate. The interest rate swap agreements on these 2003 and 2004 borrowings have aggregate notional amounts of $1,225 million. At March 31, 2004, the rate used to accrue interest expense on these agreements ranged from 1.0% to 1.4%. The differential between the fixed and variable rates to be paid or received is accrued and recognized over the life of the agreements as an adjustment to interest expense in the Condensed Consolidated Statements of Operations. We used the proceeds from the 2004 borrowings to finance a majority of the cash portion of the MAMSI purchase price as described above. We used the proceeds from the 2003 borrowings to repay commercial paper and maturing term debt, and for general corporate purposes, including working capital, capital expenditures, business acquisitions and share repurchases. Commercial paper and current maturities of long-term debt decreased from $811 million as of December 31, 2002, to $150 million as of March 31, 2004, as a result of these actions.
We have credit arrangements for $900 million that support our commercial paper program. These credit arrangements include a $450 million revolving facility that expires in July 2005, and a $450 million, 364-day facility that expires in July 2004. As of March 31, 2004, we had no amounts outstanding under our credit facilities. We intend to renew these credit facilities prior to their expiration.
On April 23, 2004, we executed a commitment letter with a financial institution in which the institution agreed to provide a $2 billion bridge loan facility to finance the cash portion of the purchase price of the proposed Oxford acquisition described above. The facility is 364 days in length and is expected to be refinanced through a bond issuance after the closing of the transaction. The terms of the bridge loan facility are substantially similar to our existing revolving credit facilities.
Our debt arrangements and credit facilities contain various covenants, the most restrictive of which require us to maintain a debt-to-total-capital ratio (calculated as the sum of commercial paper and debt divided by the sum of commercial paper, debt and shareholders equity) below 45% and to exceed specified minimum interest coverage levels. We are in compliance with the requirements of all debt covenants.
Our senior debt is rated A by Standard & Poors (S&P) and Fitch, and A3 with a positive outlook by Moodys. Our commercial paper is rated A-1 by S&P, F-1 by Fitch, and P-2 with a positive outlook by Moodys. Consistent with our intention of maintaining our senior debt ratings in the A range, we intend to maintain our debt-to-total-capital ratio at 30% or less. A significant downgrade in our debt or commercial paper ratings could adversely affect our borrowing capacity and costs.
Under our board of directors authorization, we maintain a common stock repurchase program. Repurchases may be made from time to time at prevailing prices, subject to certain restrictions on volume, pricing and timing. During the first quarter of 2004, we repurchased 10.4 million shares through this program at an average price of approximately $61 per share and an aggregate cost of approximately $630 million. As of March 31, 2004, we had board of directors authorization to purchase up to an additional 34.8 million shares of our common stock. Our common stock repurchase program is discretionary as we are under no obligation to repurchase shares. We repurchase shares because we believe it is a prudent use of capital. A decision by the company to discontinue share repurchases would significantly increase our liquidity and financial flexibility.
Under our S-3 shelf registration statement (for common stock, preferred stock, debt securities and other securities), the remaining issuing capacity of all covered securities is $250 million. We may publicly offer
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securities from time to time at prices and terms to be determined at the time of offering. We filed a new S-3 shelf registration statement on March 19, 2004 to increase our remaining issuing capacity to $2.0 billion, but this registration statement has not yet been declared effective by the Securities and Exchange Commission. Under our S-4 acquisition shelf registration statement, we have remaining issuing capacity of approximately 24.3 million shares of our common stock in connection with acquisition activities. We filed a separate S-4 registration statement for the 36.4 million shares issued in connection with the acquisition of MAMSI described above. We intend to file an S-4 registration statement for the shares to be issued in connection with the acquisition of Oxford described above.
Contractual Obligations, Off-Balance Sheet Arrangements And Commitments
A summary of future obligations under our various contractual obligations, off-balance sheet arrangements and commitments was disclosed in our December 31, 2003 Annual Report of Form 10-K. There have not been significant changes to the amounts of these obligations. Additionally, we do not have any other material contractual obligations, off-balance sheet arrangements or commitments that require cash resources; however, we continually evaluate opportunities to expand our operations. This includes internal development of new products, programs and technology applications, and may include acquisitions.
AARP
In January 1998, we initiated a 10-year contract to provide health insurance products and services to members of AARP. Under the terms of the contract, we are compensated for transaction processing and other services as well as for assuming underwriting risk. We are also engaged in product development activities to complement the insurance offerings under this program. Premium revenues from our portion of the AARP insurance offerings are approximately $4.1 billion annually.
The underwriting gains or losses related to the AARP business are directly recorded as an increase or decrease to a rate stabilization fund (RSF). The primary components of the underwriting results are premium revenue, medical costs, investment income, administrative expenses, member services expenses, marketing expenses and premium taxes. Underwriting gains and losses are recorded as an increase or decrease to the RSF and accrue to AARP policyholders, unless cumulative net losses were to exceed the balance in the RSF. To the extent underwriting losses exceed the balance in the RSF, we would have to fund the deficit. Any deficit we fund could be recovered by underwriting gains in future periods of the contract. To date, we have not been required to fund any underwriting deficits. As further described in Note 8 to the condensed consolidated financial statements, the RSF balance is reported in Other Policy Liabilities in the accompanying Condensed Consolidated Balance Sheets. We believe the RSF balance is sufficient to cover potential future underwriting or other risks associated with the contract.
Regulatory Capital And Dividend Restrictions
We conduct a significant portion of our operations through companies that are subject to standards established by the National Association of Insurance Commissioners (NAIC). These standards, among other things, require these subsidiaries to maintain specified levels of statutory capital, as defined by each state, and restrict the timing and amount of dividends and other distributions that may be paid to their parent companies. Generally, the amount of dividend distributions that may be paid by a regulated subsidiary, without prior approval by state regulatory authorities, is limited based on the entitys level of statutory net income and statutory capital and surplus. The agencies that assess our creditworthiness also consider capital adequacy levels when establishing our debt ratings. Consistent with our intent to maintain our senior debt ratings in the A range, we maintain an aggregate statutory capital level for our regulated subsidiaries that is significantly higher than the minimum level regulators require.
Critical Accounting Policies And Estimates
Critical accounting policies are those policies that require management to make the most challenging, subjective or complex judgments, often because they must estimate the effects of matters that are inherently uncertain and
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may change in subsequent periods. Critical accounting policies involve judgments and uncertainties that are sufficiently sensitive to result in materially different results under different assumptions and conditions. The following provides a summary of our accounting policies and estimation procedures surrounding medical costs. For a detailed description of all our critical accounting policies, see the Results of Operations section of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2003.
Medical Costs
Each reporting period, we estimate our obligations for medical care services that have been rendered on behalf of insured consumers but for which claims have either not yet been received or processed, and for liabilities for physician, hospital and other medical cost disputes. We develop estimates for medical care services incurred but not reported using an actuarial process that is consistently applied, centrally controlled and automated. The actuarial models consider factors such as time from date of service to claim receipt, claim backlogs, seasonal variances in medical care consumption, provider contract rate changes, medical care utilization and other medical cost trends, membership volume and demographics, benefit plan changes, and business mix changes related to products, customers and geography. Depending on the health care provider and type of service, the typical billing lag for services can range from two to 90 days from the date of service. Substantially all claims related to medical care services are known and settled within nine to 12 months from the date of service. We estimate liabilities for physician, hospital and other medical cost disputes based upon an analysis of potential outcomes, assuming a combination of litigation and settlement strategies.
Each period, we re-examine previously established medical costs payable estimates based on actual claim submissions and other changes in facts and circumstances. As the liability estimates recorded in prior periods become more exact, we increase or decrease the amount of the estimates, with the changes in estimates included in medical costs in the period in which the change is identified. In every reporting period, our operating results include the effects of more completely developed medical costs payable estimates associated with previously reported periods. If the revised estimate of prior period medical costs is less than the previous estimate, we will decrease reported medical costs in the current period (favorable development). If the revised estimate of prior period medical costs is more than the previous estimate, we will increase reported medical costs in the current period (unfavorable development). Historically, the net impact of estimate developments has represented less than 1% of annual medical costs, less than 4% of annual earnings from operations and less than 3% of medical costs payable.
In order to evaluate the impact of changes in medical cost estimates for any particular discrete period, one should consider both the amount of development recorded in the current period pertaining to prior periods and the amount of development recorded in subsequent periods pertaining to the current period. The accompanying table provides a summary of the net impact of favorable development on medical costs and earnings from operations (in millions).
Net
Favorable Development |
Net Impact
on Medical Costs(a) |
Medical Costs
|
Earnings from Operations
|
||||||||||||||||||
As Reported
|
As Adjusted(b)
|
As Reported
|
As Adjusted(b)
|
||||||||||||||||||
2000 |
$ | 15 | $ | (15 | ) | $ | 16,155 | $ | 16,140 | $ | 1,200 | $ | 1,215 | ||||||||
2001 |
$ | 30 | $ | (40 | ) | $ | 17,644 | $ | 17,604 | $ | 1,566 | $ | 1,606 | ||||||||
2002 |
$ | 70 | $ | (80 | ) | $ | 18,192 | $ | 18,112 | $ | 2,186 | $ | 2,266 | ||||||||
2003 |
$ | 150 | $ | 60 | (c) | $ | 20,714 | $ | 20,774 | (c) | $ | 2,935 | $ | 2,875 | (c) |
(a) | The amount of favorable development recorded in the current year pertaining to the prior year less the amount of favorable development recorded in the subsequent year pertaining to the current year. |
(b) | Represents reported amounts adjusted to reflect the net impact of medical cost development. |
(c) | For the first quarter of 2004, the company recorded net favorable development of $90 million pertaining to 2003. The amount of prior period development in 2004 pertaining to 2003 will change as our December 31, 2003 medical costs payable estimate continues to develop throughout 2004. |
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Our estimate of medical costs payable represents managements best estimate of the companys liability for unpaid medical costs as of March 31, 2004, developed using consistently applied actuarial methods. Management believes the amount of medical costs payable is reasonable and adequate to cover the companys liability for unpaid claims as of March 31, 2004; however, actual claim payments may differ from established estimates. Assuming a hypothetical 1% difference between our March 31, 2004 estimates of medical costs payable and actual costs payable, excluding the AARP business, first quarter 2004 earnings from operations would increase or decrease by approximately $38 million and diluted net earnings per common share would increase or decrease by approximately $0.04 per share.
Inflation
The current national health care cost inflation rate significantly exceeds the general inflation rate. We use various strategies to lessen the effects of health care cost inflation. These include setting commercial premiums based on anticipated health care costs and coordinating care with physicians and other health care providers. Through contracts with physicians and other health care providers, we emphasize preventive health care, appropriate use of health care services consistent with clinical performance standards, education and closing gaps in care.
We believe our strategies to mitigate the impact of health care cost inflation on our operating results have been and will continue to be successful. However, other factors including competitive pressures, new health care and pharmaceutical product introductions, demands from physicians and other health care providers and consumers, major epidemics, and applicable regulations may affect our ability to control the impact of health care cost inflation. Because of the narrow operating margins of our risk-based products, changes in medical cost trends that were not anticipated in establishing premium rates can create significant changes in our financial results.
Concentrations Of Credit Risk
Investments in financial instruments such as marketable securities and accounts receivable may subject UnitedHealth Group to concentrations of credit risk. Our investments in marketable securities are managed under an investment policy authorized by our board of directors. This policy limits the amounts that may be invested in any one issuer and generally limits our investments to U.S. Government and Agency securities, state and municipal securities and corporate debt obligations that are investment grade. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of employer groups that constitute our customer base. As of March 31, 2004, there were no significant concentrations of credit risk.
Cautionary Statements
The statements contained in this Quarterly Report on Form 10-Q include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the PSLRA). When used in this Quarterly Report on Form 10-Q and in future filings by us with the Securities and Exchange Commission, in our press releases, presentations to securities analysts or investors, and in oral statements made by or with the approval of one of our executive officers, the words or phrases believes, anticipates, intends, will likely result, estimates, projects or similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the results discussed in the forward-looking statements.
The following discussion contains certain cautionary statements regarding our business that investors and others should consider. This discussion is intended to take advantage of the safe harbor provisions of the PSLRA. Except to the extent otherwise required by federal securities laws, in making these cautionary statements, we do not undertake to address or update each factor in future filings or communications regarding our business or operating results, and do not undertake to address how any of these factors may have caused results to differ from
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discussions or information contained in previous filings or communications. In addition, any of the matters discussed below may have affected our past, as well as current, forward-looking statements about future results. Any or all forward-looking statements in this Quarterly Repot of Form 10-Q and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors discussed below will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially from expectations expressed in our prior communications.
We must effectively manage our health care costs.
Under risk-based product arrangements, we assume the risk of both medical and administrative costs for our customers in return for monthly premiums. Premium revenues from risk-based products (excluding AARP) comprise approximately 75% of our total consolidated revenues. We use approximately 80% to 85% of our premium revenues to pay the costs of health care services delivered to our customers. The profitability of our risk-based products depends in large part on our ability to accurately predict, price for, and effectively manage health care costs. Total health care costs are affected by the number of individual services rendered and the cost of each service. Our premium revenue is typically fixed in price for a 12-month period and is generally priced one to four months before contract commencement. Services are delivered and related costs are incurred when the contract commences. Although we base the premiums we charge on our estimate of future health care costs over the fixed premium period, inflation, regulations and other factors may cause actual costs to exceed what was estimated and reflected in premiums. These factors may include increased use of services, increased cost of individual services, catastrophes, epidemics, the introduction of new or costly treatments and technology, new mandated benefits or other regulatory changes, insured population characteristics and seasonal changes in the level of health care use. Relatively small differences between predicted and actual medical costs as a percentage of premium revenues can result in significant changes in our financial results. For example, if medical costs increased by one percent for UnitedHealthcares commercial insured products, our annual net earnings for 2003 would have been reduced by approximately $75 million. In addition, the financial results we report for any particular period include estimates of costs incurred for which the underlying claims have not been received by us or for which the claims have been received but not processed. If these estimates prove too high or too low, the effect of the change will be included in future results.
We face intense competition in many of our markets and customers have flexibility in moving between competitors.
Our businesses compete throughout the United States and face significant competition in all of the geographic markets in which they operate. For our Uniprise and Health Care Services businesses, competitors include Aetna, Anthem, Cigna, Coventry, Humana, PacifiCare, Oxford, WellPoint, numerous for profit and not for profit organizations operating under licenses from the Blue Cross Blue Shield Association and other enterprises concentrated in more limited geographic areas. Our Specialized Care Services and Ingenix businesses also compete with a number of businesses. Moreover, we believe that barriers to entry in many markets are not substantial, so the addition of new competitors can occur relatively easily, and customers enjoy significant flexibility in moving between competitors. In particular markets, these competitors may have capabilities that give them a competitive advantage. Greater market share, established reputation, superior supplier arrangements, existing business relationships, and other factors all can provide a competitive advantage. In addition, significant merger and acquisition activity has occurred in the industries in which we operate, both as to our competitors and suppliers in these industries. This level of consolidation makes it more difficult for us to retain or increase customers, to improve the terms on which we do business with our suppliers, and to maintain or advance profitability.
Our relationship with AARP is significant to our Ovations business.
Under our 10-year contract with AARP which was initiated in 1998, we provide Medicare Supplement and Hospital Indemnity health insurance and other products to AARP members. As of March 31, 2004, our portion of
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AARPs insurance program represented approximately $4.1 billion in annual net premium revenue from approximately 3.8 million AARP members. The AARP contract may be terminated early by us or AARP under certain circumstances, including a material breach by either party, insolvency of either party, a material adverse change in the financial condition of either party, and by mutual agreement. The success of our AARP arrangement depends, in part, on our ability to service AARP and its members, develop additional products and services, price the products and services competitively, and respond effectively to federal and state regulatory changes. Additionally, events that adversely affect AARP or one of its other business partners for its member insurance program could have an adverse effect on the success of our arrangement with AARP. For example, if customers were dissatisfied with the products AARP offered or its reputation, if federal legislation limited opportunities in the Medicare market, or if the services provided by AARPs other business partners were unacceptable, our business could be adversely affected.
The effects of the new Medicare reform legislation on our business are uncertain.
Recently enacted Medicare reform legislation is complex and wide-ranging. There are numerous provisions in the legislation that will influence our business, although at this early stage, it is difficult to predict the extent to which our business will be affected. While uncertain as to impact, we believe the increased funding provided in the legislation will intensify competition in the seniors health services market.
Our business is subject to intense government scrutiny and we must respond quickly and appropriately to frequent changes in government regulations.
Our business is regulated at the federal, state, local and international levels. The laws and rules governing our business and interpretations of those laws and rules are subject to frequent change. Broad latitude is given to the agencies administering those regulations. Existing or future laws and rules could force us to change how we do business, restrict revenue and enrollment growth, increase our health care and administrative costs and capital requirements, and increase our liability in federal and state courts for coverage determinations, contract interpretation and other actions. We must obtain and maintain regulatory approvals to market many of our products, to increase prices for certain regulated products and to consummate our acquisitions and dispositions. Delays in obtaining or our failure to obtain or maintain these approvals could reduce our revenue or increase our costs.
We participate in federal, state and local government health care coverage programs. These programs generally are subject to frequent change, including changes that may reduce the number of persons enrolled or eligible, reduce the amount of reimbursement or payment levels, or increase our administrative or health care costs under such programs. Such changes have adversely affected our financial results and willingness to participate in such programs in the past and may do so in the future.
State legislatures and Congress continue to focus on health care issues. Legislative and regulatory proposals at state and federal levels may affect certain aspects of our business, including contracting with physicians, hospitals and other health care professionals; physician reimbursement methods and payment rates; coverage determinations; claim payments and processing; use and maintenance of individually identifiable health information; and government-sponsored programs. We cannot predict if any of these initiatives will ultimately become binding law or regulation, or, if enacted, what their terms will be, but their enactment could increase our costs, expose us to expanded liability, require us to revise the ways in which we conduct business or put us at risk for a loss of business.
We are also subject to various governmental investigations, audits and reviews. Such oversight could result in our loss of licensure or our right to participate in certain programs, or the imposition of civil or criminal fines, penalties and other sanctions. In addition, disclosure of any adverse investigation or audit results or sanctions could damage our reputation in various markets and make it more difficult for us to sell our products and services. We are currently involved in various governmental investigations, audits and reviews. These include
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routine, regular and special investigations, audits and reviews by the Centers for Medicare and Medicaid Services, state insurance and health and welfare departments and state attorneys general, the Office of Personnel Management, the Office of the Inspector General and U.S. Attorney General.
We depend on our relationships with physicians, hospitals and other health care providers.
We contract with physicians, hospitals, pharmaceutical benefit service providers and pharmaceutical manufacturers, and other health care providers for favorable prices. A number of organizations are advocating for legislation that would exempt certain of these physicians and health care professionals from federal and state antitrust laws. In any particular market, these physicians and health care professionals could refuse to contract, demand higher payments, or take other actions that could result in higher health care costs, less desirable products for customers or difficulty meeting regulatory or accreditation requirements. In some markets, certain health care providers, particularly hospitals, physician/hospital organizations or multi-specialty physician groups, may have significant market positions or near monopolies that could result in diminished bargaining power on our part.
The nature of our business exposes us to significant litigation risks and our insurance coverage may not be sufficient to cover some of the costs associated with litigation.
Periodically, we become a party to the types of legal actions that can affect any business, such as employment and employment discrimination-related suits, employee benefit claims, breach of contract actions, tort claims, shareholder suits, and intellectual property-related litigation. In addition, because of the nature of our business, we are routinely made party to a variety of legal actions related to the design, management and offerings of our services. These matters include, but are not limited to, claims related to health care benefits coverage, medical malpractice actions, contract disputes and claims related to disclosure of certain business practices. In 1999, a number of class action lawsuits were filed against us and virtually all major entities in the health benefits business. The suits are purported class actions on behalf of physicians for alleged breaches of federal statutes, including ERISA and the Racketeer Influenced Corrupt Organization Act (RICO). Although the expenses which we have incurred to date in defending the 1999 class action lawsuits have not been material to our business, we will continue to incur expenses in the defense of the 1999 class action litigation and other matters, even if they are without merit.
Following the events of September 11, 2001, the cost of business insurance coverage has increased significantly. As a result, we have increased the amount of risk that we self-insure, particularly with respect to matters incidental to our business. We believe that we are adequately insured for claims in excess of our self-insurance; however, certain types of damages, such as punitive damages, are not covered by insurance. We record liabilities for our estimates of the probable costs resulting from self-insured matters. Although we believe the liabilities established for these risks are adequate, it is possible that the level of actual losses may exceed the liabilities recorded.
Our businesses depend significantly on effective information systems and the integrity of the data in our information systems.
Our ability to adequately price our products and services, provide effective and efficient service to our customers, and to accurately report our financial results depends significantly on the integrity of the data in our information systems. As a result of our acquisition activities, we have acquired additional systems. We have been taking steps to reduce the number of systems we operate and have upgraded and expanded our information systems capabilities. If the information we rely upon to run our businesses was found to be inaccurate or unreliable or if we fail to maintain effectively our information systems and data integrity, we could lose existing customers, have difficulty attracting new customers, have problems in determining medical cost estimates and establishing appropriate pricing, have customer and physician and other health care provider disputes, have regulatory problems, have increases in operating expenses or suffer other adverse consequences.
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We depend on independent third parties, such as IBM, Unisys and Medco Health Solutions, Inc., with whom we have entered into agreements, for significant portions of our data center operations and pharmacy benefits management and processing, respectively. Even though we have appropriate provisions in our agreements with IBM, Unisys and Medco, including provisions with respect to specific performance standards, covenants, warranties, audit rights, indemnification, and other provisions, our dependence on these third parties makes our operations vulnerable to their failure to perform adequately under the contracts, due to internal or external factors. Although there are a limited number of service organizations with the size, scale and capabilities to effectively provide certain of these services, especially with regard to pharmacy benefits processing and management, we believe that other organizations could provide similar services on comparable terms. A change in service providers, however, could result in a decline in service quality and effectiveness or less favorable contract terms.
Business acquisitions may increase costs, liabilities, or create disruptions in our business.
We have recently completed several business acquisitions. We review the records of companies we plan to acquire, however, even an in-depth review of records may not reveal existing or potential problems or permit us to become familiar enough with a business to assess fully its capabilities and deficiencies. As a result, we may assume unanticipated liabilities, or an acquisition may not perform as well as expected. We face the risk that the returns on acquisitions will not support the expenditures or indebtedness incurred to acquire such businesses, or the capital expenditures needed to develop such businesses. We also face the risk that we will not be able to integrate acquisitions into our existing operations effectively. Integration may be hindered by, among other things, differing procedures, business practices and technology systems.
We must comply with emerging restrictions on patient privacy, including taking steps to ensure compliance by our business associates who obtain access to sensitive patient information when providing services to us.
The use of individually identifiable data by our businesses is regulated at international, federal and state levels. These laws and rules are changed frequently by legislation or administrative interpretation. Various state laws address the use and maintenance of individually identifiable health data. Most are derived from the privacy provisions in the federal Gramm-Leach-Bliley Act and HIPAA. HIPAA also imposes guidelines on our business associates (as this term is defined in the HIPAA regulations). Even though we provide for appropriate protections through our contracts with our business associates, we still have limited control over their actions and practices. Compliance with these proposals and new regulations may result in cost increases due to necessary systems changes, the development of new administrative processes, and the effects of potential noncompliance by our business associates. They also may impose further restrictions on our use of patient identifiable data that is housed in one or more of our administrative databases.
Our knowledge and information-related businesses depend significantly on our ability to maintain proprietary rights to our databases and related products.
We rely on our agreements with customers, confidentiality agreements with employees, and our trade secrets, copyrights and patents to protect our proprietary rights. These legal protections and precautions may not prevent misappropriation of our proprietary information. In addition, substantial litigation regarding intellectual property rights exists in the software industry, and we expect software products to be increasingly subject to third-party infringement claims as the number of products and competitors in this industry segment grows. Such litigation and misappropriation of our proprietary information could hinder our ability to market and sell products and services.
The effects of the war on terror and future terrorist attacks could have a severe impact on the health care industry.
The terrorist attacks launched on September 11, 2001, the war on terrorism, the threat of future acts of terrorism and the related concerns of customers and providers have negatively affected, and may continue to negatively
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affect, the U.S. economy in general and our industry specifically. Depending on the governments actions and the responsiveness of public health agencies and insurance companies, future acts of terrorism and bio-terrorism could lead to, among other things, increased use of health care services including, without limitation, hospital and physician services; loss of membership in health plans we administer as a result of lay-offs or other reductions of employment; adverse effects upon the financial condition or business of employers who sponsor health care coverage for their employees; disruption of our information and payment systems; increased health care costs due to restrictions on our ability to carve out certain categories of risk, such as acts of terrorism; and disruption of the financial and insurance markets in general.
The market price of our common stock may be particularly sensitive due to the nature of the business in which we operate.
The market prices of the securities of the publicly-held companies in the industry in which we operate have shown volatility and sensitivity in response to many external factors, including general market trends, public communications regarding managed care, litigation and judicial decisions, legislative or regulatory actions, health care cost trends, pricing trends, competition, earnings, membership reports of particular industry participants and acquisition activity. Despite our specific outlook or prospects, the market price of our common stock may decline as a result of any of these external factors. By way of illustration, our stock price has ranged from $35.33 on December 31, 2001 to $64.44 on March 31, 2004 (as adjusted to reflect stock splits and dividends).
Item 3. Quantitative And Qualitative Disclosers About Market Risk
Market risk represents the risk of changes in the fair value of a financial instrument caused by changes in interest rates and equity prices. The companys primary market risk is exposure to changes in interest rates that could impact the fair value of our investments and long-term debt.
Approximately $7.3 billion of our investments at March 31, 2004 were fixed-income securities. Assuming a hypothetical and immediate 1% increase or decrease in interest rates applicable to our fixed-income investment portfolio at March 31, 2004, the fair value of our fixed-income investments would decrease or increase by approximately $340 million. We manage our investment portfolio to limit our exposure to any one issuer or industry and largely limit our investments to U.S. Government and Agency securities, state and municipal securities, and corporate debt obligations that are investment grade.
To mitigate the financial impact of changes in interest rates, we have entered into interest rate swap agreements to more closely match the interest rates of our long-term debt with those of our cash equivalents and short-term investments. Including the impact of our interest rate swap agreements, approximately $1.6 billion of our debt had variable rates of interest and $825 million had fixed rates as of March 31, 2004. A hypothetical 1% increase or decrease in interest rates would not be material to the fair value of our commercial paper and debt.
At March 31, 2004, we had $200 million of equity investments, primarily held by our UnitedHealth Capital business in various public and non-public companies concentrated in the areas of health care delivery and related information technologies. Market conditions that affect the value of health care or technology stocks will likewise impact the value of our equity portfolio.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of March 31, 2004, an evaluation was carried out under the supervision and with the participation of the Companys management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and
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15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting During the Quarter Ended March 31, 2004
There were no significant changes in our internal control over financial reporting that occurred during the Companys quarter ended March 31, 2004 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
In Re: Managed Care Litigation: MDL No. 1334. Beginning in 1999, a series of class action lawsuits were filed against us and virtually all major entities in the health benefits business. A multi-district litigation panel consolidated several litigation cases involving UnitedHealth Group and our affiliates in the Southern District Court of Florida, Miami division. In December 2000, the UnitedHealth Group litigation was consolidated with litigation involving other industry members. Generally, the health care provider plaintiffs allege violations of ERISA and RICO in connection with alleged undisclosed policies intended to maximize profits. Other allegations include breach of state prompt payment laws and breach of contract claims for failure to timely reimburse providers for medical services rendered. The consolidated suits seek injunctive, compensatory and equitable relief as well as restitution, costs, fees and interest payments. Discovery commenced on September 30, 2002. In November 2002, the Eleventh Circuit granted the industry defendants petition to review the class certification order. That appeal is pending. On April 7, 2003, the United States Supreme Court determined that the RICO claims against PacifiCare and UnitedHealthcare should be arbitrated. On September 15, 2003, the district court granted in part and denied in part the industry defendants further motion to compel arbitration. Significantly, the court denied the industry defendants motion with respect to plaintiffs derivative RICO claims. On September 19, 2003, the industry defendants appealed the district courts arbitration order to the Eleventh Circuit. A trial date has been set for March 14, 2005.
The American Medical Association et al. v. Metropolitan Life Insurance Company, United HealthCare Services, Inc. and UnitedHealth Group. This lawsuit was filed on March 15, 2000, in the Supreme Court of the State of New York, County of New York. On April 13, 2000, we removed this case to the United States District Court for the Southern District of New York. The suit alleges causes of action based on ERISA, as well as breach of contract and the implied covenant of good faith and fair dealing, deceptive acts and practices, and trade libel in connection with the calculation of reasonable and customary reimbursement rates for non-network providers. The suit seeks declaratory, injunctive and compensatory relief as well as costs, fees and interest payments. An amended complaint was filed on August 25, 2000, which alleged two classes of plaintiffs, an ERISA class and a non-ERISA class. After the Court dismissed certain ERISA claims and the claims brought by the American Medical Association, a third amended complaint was filed. On October 25, 2002, the court granted in part and denied in part our motion to dismiss the third amended complaint. We are engaged in discovery in this matter.
Because of the nature of our business, we are routinely subject to lawsuits alleging various causes of action. Some of these suits may include claims for substantial non-economic, treble or punitive damages. We record liabilities for our estimate of probable costs resulting from these matters. Although the results of pending litigation are always uncertain, we do not believe the results of any such actions, including those described above, or any other types of actions, currently threatened or pending, individually or in the aggregate, will have a material adverse effect on our consolidated financial position or results of operations.
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Item 2. Issuer Purchases of Equity Securities
Issuer Purchases of Equity Securities (1)
First Quarter 2004
|
|||||||||
For the Month Ended |
(a) Total Number of
Shares Purchased |
(b) Average Price
Paid per Share |
(c) Total Number
of Shares Purchased as Part of Publicly Announced Plans or Programs |
(d) Maximum
Number of Shares that may yet be purchased under the plans or programs |
|||||
|
|||||||||
January 31, 2004 | 1,950,000 | $ | 57.21 | 1,950,000 | |||||
|
|||||||||
February 29, 2004 | 4,566,000 | $ | 60.50 | 4,566,000 | |||||
|
|||||||||
March 31, 2004 | 3,900,000 | $ | 62.21 | 3,900,000 | |||||
|
|||||||||
TOTAL |
10,416,000 | $ | 60.52 | 10,416,000 | 34,782,000 | ||||
|
(1) On November 4, 1997, the Companys Board of Directors adopted a share repurchase program, which the Board evaluates periodically and renews as necessary. The Company announced this program on November 6, 1997, and announced renewals of the program on November 5, 1998, October 27, 1999, February 14, 2002, October 25, 2002, and July 30, 2003. In July 2003, the Board renewed the share repurchase program and authorized the Company to repurchase up to 60,000,000 shares of the Companys common stock at prevailing market prices. There is no established expiration date for the program. During the three months ended March 31, 2004, the Company did not repurchase any shares other than through this publicly announced program.
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Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed in response to Item 601 of Regulation S-K.
Exhibit Number |
Description |
|||
* Exhibit 10(a) |
| Employment Agreement, dated as of October 1, 1998, as amended, between United HealthCare Services, Inc. and Tracy L. Bahl | ||
* Exhibit 10(b) |
| Agreement for Supplemental Executive Retirement Pay, effective April 1, 2004, between UnitedHealth Group Incorporated and Stephen J. Hemsley | ||
Exhibit 10(c) |
| Amendment Number 4 to the Information Technology Services Agreement between United HealthCare Services, Inc. and Unisys Corporation, dated as of March 31, 2004 | ||
Exhibit 15 |
|
Letter Re Unaudited Interim Financial Information |
||
Exhibit 31 |
|
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
||
Exhibit 32 |
|
Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
* | Denotes management contracts and compensation plans in which certain directors and named executive officers participate and which are being filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K. |
| Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, confidential portions of this Exhibit have been deleted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. |
The following Current Reports on Form 8-K were filed or furnished, as applicable, during the first quarter of 2004.
8-K dated January 6, 2004, providing certain information regarding the transaction between the Company and Mid Atlantic Medical Services, Inc., pursuant to Item 5 Other Events and Regulation FD Disclosure.
8-K dated January 12, 2004, announcing upcoming earnings release, pursuant to Item 5 Other Events.
8-K dated January 22, 2004, together with press release, announcing fourth quarter earnings results, pursuant to Item 12 Results of Operations and Financial Condition and Item 7 Financial Statements and Exhibits.
8-K/A dated January 22, 2004, together with press release, amending 8-K dated January 22, 2004, pursuant to Item 12 Results of Operations and Financial Condition and Item 7 Financial Statements and Exhibits.
8-K dated February 5, 2004, together with Underwriting Agreement and related documents, announcing the issuance of debt securities, pursuant to Item 5 Other Events and Item 7 Financial Statements and Exhibits.
8-K dated February 10, 2004, together with press release, announcing receipt of necessary approvals and anticipated closing of the Mid Atlantic Medical Services, Inc. transaction, pursuant to Item 5 Other Events and Regulation FD Disclosure and Item 7 Financial Statements and Exhibits.
8-K dated February 17, 2004, announcing upcoming meetings with investors and analysts, pursuant to Item 9 Regulation FD Disclosure and Item 7 Financial Statements and Exhibits.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
U NITED H EALTH G ROUP I NCORPORATED
/s/ S TEPHEN J. H EMSLEY Stephen J. Hemsley |
President and Chief Operating Officer |
Dated: May 7, 2004 | ||
/s/ P ATRICK J. E RLANDSON Patrick J. Erlandson |
Chief Financial Officer and Chief Accounting Officer |
Dated: May 7, 2004 |
35
EXHIBITS
Exhibit Number |
Description |
|||
* Exhibit 10(a) |
| Employment Agreement, dated as of October 1, 1998, as amended, between United HealthCare Services, Inc. and Tracy L. Bahl | ||
* Exhibit 10(b) |
| Agreement for Supplemental Executive Retirement Pay, effective April 1, 2004, between UnitedHealth Group Incorporated and Stephen J. Hemsley | ||
Exhibit 10(c) |
| Amendment Number 4 to the Information Technology Services Agreement between United HealthCare Services, Inc. and Unisys Corporation, dated as of March 31, 2004 | ||
Exhibit 15 |
| Letter Re Unaudited Interim Financial Information | ||
Exhibit 31 |
| Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
Exhibit 32 |
| Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
* | Denotes management contracts and compensation plans in which certain directors and named executive officers participate and which are being filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K. |
| Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, confidential portions of this Exhibit have been deleted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. |
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EXHIBIT 15
LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION
May 7, 2004
UnitedHealth Group Incorporated
We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of UnitedHealth Group Incorporated and Subsidiaries for the period ended March 31, 2004, as indicated in our report dated April 30, 2004; because we did not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, is incorporated by reference in Registration Statement File Nos. 333-66013, 33-22310, 33-50282, 33-59083, 33-59623, 33-63885, 33-67918, 33-68300, 33-75846, 333-02525, 333-04875, 333-25923, 333-44613, 333-45289, 333-50461, 333-66013, 333-71007, 333-81337, 333-87243, 333-88506, 333-90247, 333-46284, 333-55666, 333-100027, 333-105875, 333-105877, 333-110356 and 333-113755.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ D ELOITTE & T OUCHE LLP
Minneapolis, Minnesota
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EXHIBIT 31
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Certification of Principal Executive Officer
I, William W. McGuire, M.D., Chairman and Chief Executive Officer of UnitedHealth Group Incorporated, certify that:
1. I have reviewed this quarterly report on Form 10-Q of UnitedHealth Group Incorporated (the registrant);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: May 7, 2004
/ S / W ILLIAM W. M C G UIRE , M.D.
|
William W. McGuire, M.D.
Chairman and Chief Executive Officer
38
Certification of Principal Financial Officer
I, Patrick J. Erlandson, Chief Financial Officer of UnitedHealth Group Incorporated, certify that:
1. I have reviewed this quarterly report on Form 10-Q of UnitedHealth Group Incorporated (the registrant);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: May 7, 2004
/s/ P ATRICK J. E RLANDSON |
Patrick J. Erlandson |
Chief Financial Officer |
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EXHIBIT 32
CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of UnitedHealth Group Incorporated (the Company) on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, William W. McGuire, M.D., Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ W ILLIAM W. M C G UIRE , M.D. |
William W. McGuire, M.D. |
Chairman and Chief Executive Officer |
May 7, 2004 |
In connection with the Quarterly Report of UnitedHealth Group Incorporated (the Company) on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Patrick J. Erlandson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ P ATRICK J. E RLANDSON |
Patrick J. Erlandson |
Chief Financial Officer |
May 7, 2004 |
40
Exhibit 10(a)
EMPLOYMENT AGREEMENT
This Agreement, effective as of October 1, 1998 (the Effective Date), is made by and between Tracy L. Bahl (Executive) and United HealthCare Services, Inc. (United HealthCare) for the purpose of setting forth the terms and conditions of Executives employment by United HealthCare, or an affiliate or subsidiary of United HealthCare, and to protect United HealthCares knowledge, expertise, customer relationships and the confidential information United HealthCare has developed about its customers, products, operations and services. Unless the context otherwise requires, when used in this Agreement United HealthCare includes any entity affiliated with United HealthCare.
WHEREAS, as additional consideration for entering into this Agreement Executive shall receive, upon execution of this Agreement, a nonqualified stock option to purchase 25,000 shares of United HealthCare Corporation (UHC) common stock with a grant date the same as the Effective Date pursuant to the terms of the UHC Amended and Restated 1991 Stock and Incentive Plan.
WHEREAS, Executive and United HealthCare desire to enter into this Agreement, which shall supersede any and all other prior employment-related agreements between Executive and United HealthCare.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and intending to be legally bound hereby, the parties hereto agree as follows:
1. Employment and Duties; Termination of Prior Agreements .
A. Employment . United HealthCare hereby employs Executive, either directly or through an affiliate or subsidiary of United HealthCare, and Executive hereby accepts such employment on the terms and conditions set forth in this Agreement. Except as specifically superseded by this Agreement, Executives employment hereunder shall be subject to all of United HealthCares policies and procedures in regard to its employees. Executives employment hereunder shall begin on the Effective Date and shall continue until terminated as set forth in Section 3 hereof.
B. Duties . Executive shall initially hold the executive level position of President, Strategic Services and perform the duties associated therewith. Executive shall perform such other executive level responsibilities as are reasonably assigned Executive from time to time. Executive agrees to devote substantially all of Executives business time and energy to the performance of Executives duties in a diligent and proper manner.
C. Termination of Prior Agreements . As of the Effective Date all other prior employment related agreements between Executive and United HealthCare will terminate in their entirety and no longer be of any force or effect.
2. Compensation .
A. Base Salary . Executive shall initially be paid a base annual salary in the amount of $250,000, payable bi-weekly, less all applicable withholdings and deductions (the Initial Base Salary). Executive shall receive a periodic performance review and consideration for an increase in the Initial Base Salary.
B. Bonus and Stock Plans . Executive shall be eligible to participate in the incentive compensation plans and the stock option and grant plans maintained by United HealthCare or an affiliate or subsidiary of United HealthCare, in the sole discretion of United HealthCare and in accordance with the terms and conditions of those plans and applicable laws and regulations.
C. Employee Benefits . Executive shall be eligible to participate in the employee benefit plans maintained by either United HealthCare or an affiliate or subsidiary of United HealthCare, including without limitation, any life, health, dental, short-term and long-term disability insurance coverages and any retirement plans, in the sole discretion of United HealthCare and in accordance with the terms and conditions of those plans and applicable laws and regulations.
D. Vacation; Illness . Executive shall be eligible for paid vacation and sick leave each year in accordance with the then-current policies of either United HealthCare or an affiliate or subsidiary of United HealthCare, in the sole discretion of United HealthCare and in accordance with the terms and conditions of those plans and applicable laws and regulations.
3. Term and Termination .
A. Term . The term of this Agreement shall begin on the Effective Date and shall continue until terminated as set forth in Section 3B.
B. Termination of Agreement .
1. By Mutual Agreement : This Agreement and Executives employment hereunder may be terminated at any time by the mutual written agreement of the parties.
-2-
2. By United HealthCare : United HealthCare may terminate this Agreement and Executives employment hereunder on 30 days written notice.
3. By Executive : Executive may terminate this Agreement and Executives employment hereunder on 30 days written notice.
4. Death, Disability, Etc. : This Agreement and Executives employment by United HealthCare shall terminate immediately upon Executives death. This Agreement and Executives employment hereunder shall automatically terminate in the event of a permanent and total disability which renders Executive incapable of performing Executives duties, with or without reasonable accommodation. United HealthCare has the sole discretion to determine whether Executive is permanently or totally disabled with the meaning of this Section 3B4, and the effective date on which Executive was rendered so disabled.
C. Employee Benefits : On the effective date of the termination of this Agreement and Executives employment by United HealthCare, Executive shall cease to be eligible for all employee benefit plans maintained by United HealthCare, except as required by federal or state continuation of coverage laws (COBRA Benefits). If Executive elects COBRA Benefits, Executive shall pay the entire cost of such benefits either through after-tax payroll deductions from the cash component of any severance compensation Executive receives or directly if Executive does not receive such severance compensation or if such severance compensation ceases.
D. Severance Events and Benefits : If a Severance Event, as hereinafter defined, occurs, Executive shall receive the severance benefits set forth in this Section 3D for a period of 12 months from the effective date of the applicable Severance Event (the Severance Period). For purposes of this Agreement a Severance Event shall occur if and when:
(i) | United HealthCare (a) terminates this Agreement and Executives employment without Cause, as hereinafter defined, or (b) terminates this Agreement without terminating Executives employment and Executive elects to treat such termination of this Agreement as a Change in Employment, as hereinafter defined (collectively a Termination without Cause), or |
(ii) | Within two years following a Change in Control, as hereinafter defined, either (a) United HealthCare terminates this Agreement and Executives employment without Cause, or (b) a Change in Employment occurs and Executive elects to treat such Change in Employment as a termination of Executives employment (a Termination following a Change in Control). |
-3-
1. Severance Compensation : Executive shall receive the following severance compensation (the Severance Compensation):
a) Termination without Cause . Subject to Section 3D(1)(b) below, upon a Termination without Cause Executive shall receive biweekly payments equal to 1/26 of the sum of (1) Executives annualized base salary as of the date of the Severance Event, less all applicable withholdings or deductions required by law and Executives COBRA Benefit payments, if any, plus (2) one-half of the total of any bonus or incentive compensation paid or payable to Executive for the two most recent calendar years (excluding any special or one-time bonus or incentive compensation payments), or if Executive has been eligible for such bonus or incentive compensation payments for less than two such periods, the last such payment paid or payable to Executive (excluding any special or one-time bonus or incentive compensation payments).
b) Termination following a Change in Control : Upon a Termination following a Change in Control, Executive shall receive biweekly payments equal to 1/26 of two times the sum of (1) Executives highest annualized base salary during the 2 year period immediately preceding the Severance Event, less all applicable withholdings or deductions required by law and Executives COBRA Benefit payments, if any, plus (2) the greater of (i) all bonuses that would be payable to Executive under any incentive compensation plans in which Executive then participates at Executives then-current target level, or (ii) one-half of the total of any bonus or incentive compensation paid or payable to Executive for the two most recent calendar years (excluding any special or one-time bonus or incentive compensation payments), or if Executive has been eligible for such bonus or incentive compensation payments for less than two such periods, the last such payment paid or payable to Executive (excluding any special or one-time bonus or incentive compensation payments.)
2. Cash Payment : Executive shall receive a one-time cash payment within a reasonable time following commencement of the Severance Period in an amount equal to the portion of the premiums that United HealthCare, or its affiliate or subsidiary, as applicable, subsidizes for employee-only health, dental and group term life benefit coverages (the Cash Payment). The Cash Payment shall cover the Severance Period and shall be determined as of the effective date of the applicable Severance Event.
3. Job Search Fees . For a period not to exceed the Severance Period, United HealthCare shall pay to an outplacement firm selected by United HealthCare an amount deemed reasonable by United HealthCare for outplacement and job search services for Executive.
-4-
This Section 3D shall be the sole liability of United HealthCare to Executive upon the termination of this Agreement and Executives employment hereunder, and shall replace and be in lieu of any payments or benefits which otherwise might be owed Executive under any other severance plan or program maintained by United HealthCare. Such compensation and benefits shall be conditioned on receipt by United HealthCare of a separation agreement and a release of claims by Executive on terms and conditions acceptable to United HealthCare in its sole discretion.
E. Definitions and Procedures .
1. Cause . For purposes of this Agreement Cause shall mean (a) the refusal of Executive to follow the reasonable direction of the Board of Directors of United HealthCare or Executives supervisor or to perform any duties reasonably required on material matters by United HealthCare, (b) material violations of United HealthCares Code of Conduct or (c) the commission of any criminal act or act of fraud or dishonesty by Executive in connection with Executives employment by United HealthCare. Prior to the termination of Executives employment under subsection (a) of this definition of Cause, United HealthCare shall provide Executive with a 30 day notice specifying the basis for Cause. If the Cause described in the notice is cured to United HealthCares reasonable satisfaction prior to the end of the 30 day notice period, Executives employment hereunder shall not be terminated on that basis.
2. Change in Control . For purposes of this Agreement Change in Control shall mean (a) the acquisition by any person, entity or group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the Exchange Act), other than United HealthCare or any employee benefit plan of United HealthCare, of beneficial ownership (as defined in the Exchange Act) of 20% or more of the common stock of UHC or the combined voting power of UHCs then-outstanding voting securities in a transaction or series of transactions not approved in advanced by a vote of at least three-quarters of the directors of UHC; (b) a change in 50% or more of the directors of UHC in any 12 month period; (c) the approval by the shareholders of UHC of a reorganization, merger, consolidation, liquidation or dissolution of UHC or of the sale (in one transaction or series of related transactions) of all or substantially all of the assets of UHC other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by a vote of at least three-quarters of the directors; (d) the first purchase under any tender offer or exchange offer (other than an offer by UHC) pursuant to which shares of UHC common stock are purchased; or (e) at least a majority of the directors of UHC determine in their sole discretion that there has been a change of control of UHC.
-5-
3. Change in Employment . For purposes of this Agreement a Change in Employment shall be deemed to have occurred (a) if (i) Executives duties are materially and adversely changed without Executives prior consent, (ii) Executives salary or benefits are reduced other than as a general reduction of salaries and benefits by United HealthCare, (iii) without terminating Executives employment United HealthCare terminates this Agreement, or (iv) the geographic location for the performance of Executives duties hereunder is moved more than 50 miles from the geographic location at the Effective Date without Executives prior consent, and (b) if in each case under subsections (a) (i), (ii), (iii) and (iv), in the period beginning 90 days before the time the Change in Employment occurs, Cause does not exist or if Cause does exist United HealthCare has not given Executive written notice that Cause exists. Notwithstanding the foregoing, an isolated, insubstantial or inadvertent action by United HealthCare, which is remedied by United HealthCare within 30 days after receipt of notice thereof by Executive, shall not constitute a Change in Employment. Executive may elect to treat a Change in Employment as a termination of this Agreement and Executives employment hereunder. To do so Executive shall send written notice of such election to United HealthCare within 90 days after the date Executive receives notice from United HealthCare or otherwise is definitely informed of the events constituting the Change in Employment. No Change in Employment shall be deemed to have occurred if Executive fails to send the notice of election within the 90 day period. Executives failure to treat a particular Change in Employment as a termination of employment shall not preclude Executive from treating a subsequent Change in Employment as a termination of employment. The effective date of a Change in Employment termination shall be the date 30 days after United HealthCare receives the written notice of election.
4. Property Rights, Confidentiality, Non-Disparagement, Non-Solicit and Non-Compete Provisions .
A. United HealthCares Property .
1. Assignment of Property Rights . Executive shall promptly disclose to United HealthCare in writing all inventions, discoveries and works of authorship, whether or not patentable or copyrightable, which are conceived, made, discovered, written or created by Executive alone or jointly with another person, group or entity, whether during the normal hours of employment at United HealthCare or on Executives own time, during the term of this Agreement. Executive assigns all rights to all such inventions and works of authorship to United HealthCare. Executive shall give United HealthCare any assistance it reasonably requires in order for United HealthCare to perfect, protect, and use its rights to inventions and works of authorship.
-6-
This provision shall not apply to an invention for which no equipment, supplies, facility or trade secret information of United HealthCare was used and which was developed entirely on the Executives own time and which (1) does not relate to the business of United HealthCare or to United HealthCares anticipated research or development, or (2) does not result from any work performed by the Executive for United HealthCare.
2. No Removal of Property . Executive shall not remove any records, documents, or any other tangible items (excluding Executives personal property) from the premises of United HealthCare in either original or duplicate form, except as is needed in the ordinary course of conducting business for United HealthCare.
3. Return of Property . Executive shall immediately deliver to United HealthCare, upon termination of employment with United HealthCare, or at any other time upon United HealthCares request, any property, records, documents, and other tangible items (excluding Executives personal property) in Executives possession or control, including data incorporated in word processing, computer and other data storage media, and all copies of such records, documents and information, including all Confidential Information, as defined below.
B. Confidential Information . During the course of employment Executive will develop, become aware of and accumulate expertise, knowledge and information regarding United HealthCares organization, strategies, business and operations and United HealthCares past, current or potential customers and suppliers. United HealthCare considers such expertise, knowledge and information to be valuable, confidential and proprietary and it shall be considered Confidential Information for purposes of this Agreement. During this Agreement and at all times thereafter Executive shall not use such Confidential Information or disclose it to other persons or entities except as is necessary for the performance of Executives duties for United HealthCare or as has been expressly permitted in writing by United HealthCare. This Section 4B shall survive the termination of this Agreement.
C. Non-Disparagement . Executive agrees that he will not criticize, make any negative comments or otherwise disparage or put in disrepute United HealthCare, or those associated with United HealthCare, in any way, whether orally, in writing or otherwise, directly or by implication in communication with any person, including but not limited to customers or agents of United HealthCare. This Section 4C shall survive the termination of this Agreement.
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D. Non-Solicitation . During (i) the term of this Agreement, (ii) the Severance Period or any period in which Executive receives severance compensation pursuant to United HealthCare election under Section 4E, as applicable (iii) any period following the termination or expiration of this Agreement during which Executive remains employed by United HealthCare and (iv) for a period of one year after the last day of the latest of any period described in (i), (ii) or (iii), Executive shall not (y) directly or indirectly attempt to hire away any then-current employee of United HealthCare or a subsidiary of United HealthCare or to persuade any such employee to leave employment with United HealthCare, or (z) directly or indirectly solicit, divert, or take away, or attempt to solicit, divert, or take away, the business of any person, partnership, company or corporation with whom United HealthCare (including any subsidiary or affiliated company in which United HealthCare has a more than 20% equity interest) has established or is actively seeking to establish a business or customer relationship. This Section 4D shall survive the termination of this Agreement.
E. Non-Competition . During (i) the term of this Agreement, (ii) the Severance Period or any period in which Executive receives severance compensation pursuant to United HealthCare election under this Section 4E, as applicable, and (iii) any period following the termination or expiration of this Agreement during which Executive remains employed by United HealthCare, Executive shall not, without United HealthCares prior written consent, engage or participate, either individually or as an employee, consultant or principal, partner, agent, trustee, officer or director of a corporation, partnership or other business entity, in any business in which United HealthCare (including any subsidiary or affiliated company in which United HealthCare has more than a 20% equity interest) is engaged. If Executive terminates this Agreement, and as of such termination or within 90 days of such termination Executive also terminates Executives employment by United HealthCare, United HealthCare may elect to have the provisions of this Section 4E be in effect for up to 24 months following the effective date of Executives employment termination if, during the period up to 24 months specified by United HealthCare, United HealthCare pays Executive severance compensation equal to biweekly payments of 1/26 of the Severance Compensation and the Cash Payment. United HealthCare must send written notice of such election within 10 days after it receives written notice of Executives termination of employment. This Section 4E shall survive the termination of this Agreement.
5. Miscellaneous .
A. Assignment . This Agreement shall be binding upon and shall inure to the benefit of the parties and their successors and assigns, but may not be assigned by either party without the prior written consent of the other party, except that United HealthCare in its sole discretion may assign this Agreement to an entity controlled by United HealthCare at the time of the assignment. If United HealthCare subsequently loses or gives up control of the entity to which
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this Agreement is assigned, such entity shall become United HealthCare for all purposes under this Agreement, beginning on the date on which United HealthCare loses or gives up control of the entity. Any successor to United HealthCare shall be deemed to be United HealthCare for all purposes of this Agreement.
B. Notices . All notices under this Agreement shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed by registered or certified mail, return receipt requested, postage prepaid, to the party to receive the same at the address set forth below or at such other address as may have been furnished by proper notice.
United HealthCare: |
300 Opus Center |
|
9900 Bren Road East |
||
Minnetonka, MN 55343 |
||
Attn: General Counsel |
||
Executive: |
C. Entire Agreement . This Agreement contains the entire understanding of the parties with respect to its subject matter and may be amended or modified only by a subsequent written amendment executed by the parties. This Agreement replaces and supersedes any and all prior employment or employment related agreements and understandings, including any letters or memos which may have been construed as agreements, between the Executive and United HealthCare.
D. Choice of Law . This Agreement shall be construed and interpreted under the applicable laws and decisions of the State of Minnesota.
E. Waivers . No failure on the part of either party to exercise, and no delay in exercising, any right or remedy under this Agreement shall operate as a waiver; nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of any right or remedy.
F. Adequacy of Consideration . Executive acknowledges and agrees that Executive has received adequate consideration from United HealthCare to enter into this Agreement.
G. Dispute Resolution and Remedies . Any dispute arising between the parties relating to this Agreement or to Executives employment by United HealthCare shall be resolved by binding arbitration pursuant to United HealthCare Employment Arbitration Policy. The arbitrators shall not ignore or vary the terms of this Agreement and shall be bound by and apply controlling law. The
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parties acknowledge that Executives failure to comply with the Confidential Information, Non-Solicitation and Non-Competition provisions of this Agreement will cause immediate and irreparable injury to United HealthCare and that therefore the arbitrators, or a court of competent jurisdiction if an arbitration panel cannot be immediately convened, will be empowered to provide injunctive relief, including temporary or preliminary relief, to restrain any such failure to comply.
H. No Third-Party Beneficiaries . This Agreement shall not confer or be deemed or construed to confer any rights or benefits upon any person other than the parties.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, this Agreement has been signed by the parties hereto as of the Effective Date set forth above.
United HealthCare Services, Inc. |
Executive |
|||||
By |
/s/ Robert J. Backes |
/s/ Tracy L. Bahl |
||||
Its |
SR. V.P. H.R. |
Tracy L. Bahl |
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Memorandum of Understanding
This memorandum of understanding, effective as of October 1, 1998, supplements and amends the employment agreement, effective as of October 1, 1998, between United HealthCare Services, Inc. and Tracy L. Bahl as set forth below.
1. Non-Solicitation : The parties agree that the reference in Section 4(D)(iv) to one year is amended to read 6 months.
2. Non-Competition : The parties agree that the references in Section 4(E) to 24 months are amended to read 12 months.
In all other respects the parties reaffirm and agree to be bound by the provisions of the Employment Agreement, effective as of the date set forth above.
United HealthCare Services, Inc. |
Executive |
|||||
By |
/s/ Robert J. Backes |
/s/ Tracy L. Bahl |
||||
Its |
SR. V.P. H.R. |
Tracy L. Bahl |
Exhibit 10(b)
AGREEMENT
FOR
SUPPLEMENTAL EXECUTIVE RETIREMENT PAY
This Agreement, effective as of April 1, 2004, is made by and between Stephen J. Hemsley (Executive) and UnitedHealth Group Incorporated, a Minnesota corporation (UnitedHealth Group).
WITNESSETH:
WHEREAS, Executive is currently employed as President and Chief Operating Officer of UnitedHealth Group; and
WHEREAS, the Employment Agreement, dated effective October 13, 1999, between Executive and UnitedHealth Group (Executives Employment Agreement) provides that UnitedHealth Group will use its best efforts to establish and provide Executive a supplemental retirement benefit plan; and
WHEREAS, UnitedHealth Group and Executive desire to enter into this Agreement for supplemental employee retirement benefits; and
WHEREAS, UnitedHealth Group and Executive agree that this Agreement satisfies the requirement in Executives Employment Agreement for UnitedHealth Group to provide Executive a supplemental retirement benefit plan.
NOW, THEREFORE, based on the foregoing and the mutual promises which follow, the parties hereto agree as follows:
1. Supplemental Retirement Benefit .
1.1. When Available . Upon Executives termination of employment with UnitedHealth Group and all affiliates (except in the case of Executives death), Executive shall receive a supplemental retirement benefit within sixty (60) days following the date of such termination, or, if later, on the earliest date that such payment would be fully deductible by UnitedHealth Group for federal income tax purposes (but no later that one (1) year after such termination of employment). If Executive dies after such termination of employment but before payment, the payment Executive otherwise would have received shall be made to Executives surviving spouse or, if no spouse survives him, to his estate.
1.2. Form of Benefit . UnitedHealth Group shall provide Executive a supplemental retirement benefit in the form of a lump sum payment of cash.
1.3 Amount of Benefit . The amount of the lump sum payment shall be the actuarial equivalent of the annual lifetime payments described below, assuming that such annual payments begin sixty (60) days following the Executives termination of employment with UnitedHealth Group and end with the payment due on or immediately preceding the Executives death. If actual payment of the lump sum is made later than sixty (60) days following such termination of employment, such actuarial equivalent will be increased to take into account the actual date of payment. For purposes of determining the actuarially equivalent lump sum, the
amount of each annual lifetime payment shall be equal to the product of the Executives accrued benefit percentage and Executives average eligible compensation.
1.3.1. Accrued Benefit Percentage . The Executives accrued benefit percentage shall be determined in accordance with the following table based on Executives age at the time of Executives termination of employment with UnitedHealth Group and all affiliates.
Age |
Accrued Benefit Percentage |
|
51 |
16.50% | |
52 |
19.25% | |
53 |
22.00% | |
54 |
24.75% | |
55 |
27.50% | |
56 |
30.25% | |
57 |
33.00% | |
58 |
35.75% | |
59 |
38.50% | |
60 |
41.25% | |
61 |
44.00% | |
62 |
46.75% | |
63 |
49.50% | |
64 |
52.25% | |
65 |
55.00% |
1.3.2. Average Eligible Compensation . Executives average eligible compensation shall be equal to one-fifth (1/5th) of eligible compensation paid to Executive during the 60 months ending on the last day of the month immediately preceding the month in which the Executives termination of employment with UnitedHealth Group and all affiliates occurs, subject to the following rules:
All determinations of eligible compensation shall be made on a cash basis (and not an accrual basis).
Eligible compensation shall mean Executives base annual salary together with Executives annual cash incentive compensation. Executives base annual salary shall mean the regular base cash pay (before deductions for taxes and similar items) paid to Executive for services rendered to UnitedHealth Group. Base annual salary does not include non-base pay such as benefits, perquisites, allowances, per diem payments, bonuses, incentive compensation, equity compensation, fringe benefits, special pay, awards or commissions. Base annual salary includes regular base cash pay that is voluntarily contributed by Executive to a qualified retirement plan or nonqualified deferred compensation plan sponsored by UnitedHealth Group, but it shall not include earnings on those amounts. Such amounts shall be included in base annual salary at the time they would otherwise have been paid to Executive.
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Executives annual cash incentive compensation shall mean the Annual Incentive Award paid to Executive under terms of the UnitedHealth Group Executive Incentive Plan, or any short-term annual incentive award paid to Executive under a predecessor or successor plan to the UnitedHealth Group Executive Incentive Plan. Annual cash incentive compensation shall not include long-term Performance Awards paid or payable to Executive under terms of the UnitedHealth Group Executive Incentive Plan, any long-term incentive award paid or payable under any successor plan to the UnitedHealth Group Executive Incentive Plan, the value of any equity or other stock-related compensation awarded or paid or payable to Executive or any compensation resulting from the sale of UnitedHealth Group stock or exercise of UnitedHealth Group stock options. Annual cash incentive compensation includes annual cash incentive compensation that is voluntarily contributed by Executive to a qualified retirement plan or nonqualified deferred compensation plan sponsored by UnitedHealth Group, but it shall not include earnings on those amounts. Such amounts shall be included in annual cash incentive compensation at the time they would otherwise have been paid to Executive.
1.3.3. Imputed Age . Depending on the nature of Executives termination of employment with UnitedHealth Group and all affiliates (as determined under Executives Employment Agreement), Executive shall be imputed with additional years of age in accordance with the following table for the purpose of calculating the Executives accrued benefit percentage:
Termination |
Imputed Age |
|
By UnitedHealth Group without Cause, or by Executive for Good Reason other than under Clause (F) of Section 3(h)(iii) of Executives Employment Agreement: |
||
· Within one (1) year of a Change in Control |
Three (3) additional years of age.
|
|
· Not within one (1) year of a Change in Control |
Two (2) additional years of age.
|
|
By Executive for Good Reason under Clause (F) of Section 3(h)(iii) of Executives Employment Agreement: |
||
· Within thirty (30) months after Change in Control |
Three (3) additional years of age. | |
· Not within thirty (30) months after Change in Control |
Two (2) additional years of age. | |
In the event of Permanent Disability |
One (1) additional year of age. |
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1.4. Actuarial Factors . The actuarially equivalent value of any optional form of benefit shall be determined by consulting actuaries who are retained by UnitedHealth Group and are acceptable to Executive (or, if applicable, to Executives surviving spouse).
1.5. Vesting . Executive shall be fully (100%) vested in his accrued benefit.
2. Death Benefit . If Executive dies while employed by UnitedHealth Group or any affiliate, neither Executive (including Executives heirs and estate) nor Executives spouse will be entitled to a supplemental retirement benefit described in Section 1. Executives surviving spouse, however, shall be entitled to a lump sum payment equal to the benefit calculated in accordance with Section 1 as if Executive had terminated employment with UnitedHealth Group and all affiliates the day before his death and without regard to Section 1.3.3. Payment of the benefit shall commence within sixty (60) days following the date of Executives death or, if later, on the earliest date that such payment would be fully deductible by UnitedHealth Group for federal income tax purposes (but no later than one (1) year after Executives death). Executives surviving spouse shall be the person to whom Executive is legally married on the date of Executives death. If such spouse survives Executive but dies before payment, the payment she otherwise would have received shall be made to her estate. If no such spouse survives Executive or if Executive dies after termination of employment with UnitedHealth Group and all affiliates, no payments shall be made under this Agreement after Executives death (except as provided under Section 1.1 of this Agreement).
3. Source of Payment . Benefits under this Agreement will be paid out of the general assets of UnitedHealth Group, and Executive (or Executives surviving spouse) will not have any preferred interest by way of trust, escrow, lien or otherwise in any specific assets. The rights to payments to Executive (or Executives surviving spouse) under this Agreement will be solely those of an unsecured creditor of UnitedHealth Group. If a Change in Control occurs, UnitedHealth Group will establish a rabbi trust for the benefit of Executive. UnitedHealth Group will fully fund such trust to provide benefits under this Agreement to the extent it can do so without causing Executive to include such benefits for federal income tax purposes before receiving payment.
4. Nontransferability . Executive (and Executives surviving spouse) shall not have the right to assign, encumber or otherwise anticipate the payments to be made under this Agreement. The payments provided hereunder shall not be subject to seizure for payment of any debts or judgments against Executive (or Executives surviving spouse).
5. Tax Withholding . UnitedHealth Group may deduct from any benefit payment (and transmit to the proper taxing authority) such amounts as it may be required to withhold under any applicable federal, state or other law.
6. Parachute Payment Gross-Up . In the event that the benefit payments under this Agreement (and any other agreement between Executive and UnitedHealth Group) are parachute payments within the meaning of, and the regulations, rulings and procedures under, sections 280G and 4999 of the Internal Revenue Code of 1986, as the same from time to time may be amended (the Code), or other related or successor sections and provisions of the Code at any time applicable thereto, and become subject to excise taxes under section 4999 of the Code, UnitedHealth Group will pay Executive the amount of such excise taxes plus all federal,
4
state and local taxes applicable to UnitedHealth Groups payment of such excise taxes, including any additional excise taxes due under section 4999 of the Code with respect to payments made pursuant to this Section 6. All determinations required by this Section 6 shall be at UnitedHealth Groups sole expense and shall forthwith be made by UnitedHealth Groups regularly engaged independent public accounting firm. In determining the amount of excise tax which would be payable by the Executive pursuant to section 4999 of the Code, such accounting firm shall take into consideration and apply all non-includible, excludable and exempt amounts of compensation in accordance with section 280G of the Code. The parties shall cooperate fully by promptly providing such accounting firm all information required to complete such determinations. Such determinations shall be set forth in a written statement and analysis thereof issued by such accounting firm which shall be promptly furnished to and shall be binding upon the parties. In the event Executive is subject to any audit with respect to the amount of such excise taxes, Executive and UnitedHealth Group will mutually cooperate in contesting such audit; provided that UnitedHealth Group will pay the cost of such contest and will reimburse Executive on an after-tax basis for any additional excise taxes payable as a result of such audit and for any income taxable to Executive as a result of UnitedHealth Group paying the cost of such audit and any additional excise taxes. In the event any such audit results in a refund, Executive will turn over the refund to UnitedHealth Group less any income taxes incurred by Executive in respect of the receipt of the refund.
7. Claims Procedure .
7.1. Claims Procedure . Payments will be paid to Executive (and, if applicable, to Executives surviving spouse) automatically without the requirement of an application for benefits. If Executive or any other person is in disagreement with any determination that has been made, a claim may be presented.
7.1.1. Making a Claim . The claim must be written and must be delivered to UnitedHealth Groups Board of Directors. Within ninety (90) days after the claim is delivered, the claimant will receive either: (a) a decision; or (b) a notice describing special circumstances requiring a specified amount of additional time (but no more than one hundred eighty (180) days from the day the claim was delivered) and the date by which a decision is expected to be reached.
If the claim is wholly or partially denied, the claimant will receive a written or electronic notice specifying: (a) the reasons for denial; (b) the provisions of this Agreement on which the denial is based; and (c) any additional information needed in connection with the claim and the reason such information is needed. Information concerning the claimants right to request a review and right to file a civil action under section 502(a) of ERISA if a claim is denied upon review will also be given to the claimant.
7.1.2. Requesting Review of a Denied Claim . If a claimants claim is denied, the claimant must file a request to have the denial reviewed. The request for review must be written and must be delivered to UnitedHealth Groups Board of Directors within sixty (60) days after claimants receipt of written notice that the claim was denied. A request for review may (but is not required to) include issues and comments the claimant wants considered in the review. Upon request, a claimant is
5
entitled to receive free of charge reasonable access to and copies of the documents, records and information relevant to the claim. Within sixty (60) days after delivery of a request for review, the claimant will receive either: (a) a decision; or (b) a notice describing special circumstances requiring a specified amount of additional time (but no more than one hundred twenty (120) days from the day the request for review was delivered) and the date by which a decision is expected to be reached.
If the claim is wholly or partially denied, the claimant will receive a written or electronic notice specifying: (a) the reasons for denial; (b) the provisions of this Agreement on which the denial is based; and (c) notice that upon request the claimant is entitled to receive free of charge reasonable access to and copies of the relevant documents, records and information used in the claim process. Information concerning the claimants right to file a civil action under section 502(a) of ERISA will also be given to the claimant.
7.1.3. In General . All decisions on claims and on reviews of denied claims will be made by UnitedHealth Groups Board of Directors. The Board of Directors may, in its discretion, hold one or more hearings. The claimant may, at the claimants own expense, have an attorney or other representative act on behalf of the claimant, but the Board of Directors reserves the right to require a written authorization.
7.1.4. Disability Claims . In general, the foregoing rules that apply to claims and review of claims also apply to claims based on disability. There are, however, certain different time frames and special rules that apply to claims based on disability. The time period for responding to a claim is shortened from ninety (90) days to forty-five (45) days. The time to respond may be extended by thirty (30) days and then an additional thirty (30) days. A claimant must file a request for review within one hundred eighty (180) days after the date that the claimant received notice that the claim had been denied. The time period for responding to a request for review is shortened from sixty (60) days to forty-five (45) days. The time to respond may be extended by forty-five (45) days.
8. Effect of Agreement . This Agreement embodies the entire understanding between the parties with respect to the subject matter of this Agreement and supersedes any and all prior understandings and agreements, oral or written, relating thereto. Any amendment of this Agreement must be in writing and signed by both parties.
9. Severability . Should any provision of this Agreement be held to be void, invalid, unenforceable or illegal, the validity and enforceability of the other provisions shall not be affected thereby.
10. Non-Waiver . Failure of either party to enforce any provision of this Agreement shall not constitute or be construed as a waiver of such provision nor of the right to enforce such provision.
11. Regulatory and Tax Status of Agreement . For purposes of the ERISA, this Agreement is intended to be an unfunded pension plan maintained by UnitedHealth Group for a select group of management or highly compensated employees, and UnitedHealth Group will file
6
with the Department of Labor the statement described in 29 C.F.R. §2520.104-23. For purposes of income and social security taxes, the benefits provided under this Agreement are intended to provide unfunded nonqualified deferred compensation.
12. Governing Law . To the extent not governed by federal law, this Agreement shall be governed by and construed under the laws of the State of Minnesota.
13. Interpretation . Capitalized terms not defined in this Agreement shall have the meaning given to them in the Executives Employment Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first written above.
EXECUTIVE: |
||||
By |
/s/ Stephen J. Hemsley |
|||
Stephen J. Hemsley |
||||
UNITEDHEALTH GROUP INCORPORATED |
||||
By |
/s/ David J. Lubben |
7
Exhibit 10 (c)
AMENDMENT NUMBER 4
TO
INFORMATION TECHNOLOGY SERVICES AGREEMENT
This is Amendment No. 4, dated as of March 31, 2004 (the Amendment Effective Date), to the Information Technology Services Agreement dated as of June 1, 1996 between Unisys Corporation (Unisys) and United HealthCare Services, Inc., (UHS), as amended (the Agreement).
WHEREAS, the Parties wish to amend the Agreement, its Amendments and Exhibits, and/or Additional Service Requests thereunder in order to make certain modifications and add additional terms.
NOW, THEREFORE, in consideration of the premises and mutual promises herein contained, it is agreed that the Agreement is hereby amended as follows:
1. | Unless otherwise defined herein, all capitalized terms not defined herein shall have the same meaning ascribed to such terms in the Agreement. |
2. | The list of Exhibits to the Agreement, together with all Exhibits to the Agreement, are hereby deleted in their entirety and replaced by the List of Exhibits and accompanying Exhibits, attached hereto as Attachment 1 and incorporated by reference herein. The Parties understand and agree that the terms Additional Services Schedule and Additional Services Request (ASR) shall have the same meaning. |
3. | Amendment Number 1 to the Agreement is hereby deleted in its entirety. |
4. | Amendment Number 2 to the Agreement is hereby deleted in its entirety. |
5. | Amendment Number 3 to the Agreement is hereby deleted in its entirety. |
6. | Article 1 (Definitions), Subsection (16) (Base Charges) is hereby deleted in its entirety and replaced by the following: |
(16) Base Charges shall mean the fees for the Base Services set forth in Exhibit 11. Regardless of this Amendments execution or effective date, as of March 1, 2004 through February 28, 2006, the Base Charges for the Base Services, as well as the fees for ASR 04024 shall be subject to the fixed payment schedule set forth in Exhibit 11b. After February 28, 2006, any fees for such Base Services shall be determined by application of the rate card set forth in Exhibit 11a, and the fees for ASR 04024 shall be as set forth therein. Fees for any other Base Service conducted during the Term of this Agreement, including any extension thereto as specifically provided for in Article 2, shall, unless otherwise agreed by the Parties, be determined by application of the rate card set forth in Exhibit 11a. * * * Fees for Services under ASRs (other than ASRs 04024, 9724-rev2, 9872A, 03144, 03158 and 03192) are not included in Base Charges. Fees for Services under ASRs 04024, 9724-rev2, 9872A, 03144, 03158 and 03192 are included in the Base Charges.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
1
7. | Article 1 (Definitions), Subsection (23) (Confidential Information) is hereby deleted in its entirety and replaced by the following: |
(23) Confidential Information shall mean confidential or proprietary information concerning the disclosing Party and/or its business, vendors, products or services in connection with this Agreement, its Exhibits and any ASR. Confidential Information of UHS includes, without limitation, systems architecture, policies and procedures, customer, employee, provider, vendor and member information, claims information, vendor information (including agreements, software and products), product plans, and any other information which is normally and reasonably considered confidential. Confidential Information shall include the terms of this Agreement.
8. | Article 1 (Definitions), Subsection (79) (Unisys Machines) is hereby deleted in its entirety and replaced by the following: |
(79) Unisys Machines shall mean those machines and equipment owned or leased by Unisys for use in connection with the Services, consisting of such machines and equipment set forth in Exhibit 6 . It is the intent of the Parties that Exhibit 6 reflect an accurate, comprehensive listing of all machines and equipment owned or leased by Unisys and in use at any given time during the Term of the Agreement, including any extension thereto, in connection with the Services. Accordingly, the Parties understand and agree that, to the extent that any such machines and/or equipment are added to or removed from the provision of such Services, Exhibit 6 shall be deemed to have been automatically modified to reflect such addition or removal and shall, in addition, be formally updated pursuant to Section 3.19.
9. | Article 2 (Term) of the Agreement is hereby deleted in its entirety and replaced by the following: |
The term of this Agreement shall commence on June 1, 1996 and shall continue until 12:00 midnight (Central Standard Time) on December 31, 2008, unless terminated earlier pursuant to this Agreement (the Term); provided, however, that the foregoing shall not apply to any of the ASRs, a partial list of which is contained in Exhibit 33. At the end of the Term, UHS may extend in whole (but not in part): (a) the mainframe processing and storage resource services provided by Unisys to UHS used to run UHS COSMOS application, and any other services necessary to run COSMOS provided by Unisys to UHS (collectively the Mainframe Services) * * * by providing written notice of its intent to do same to Unisys by no later than October 2, 2008. Such extended term shall be for a period not to exceed six (6) months; provided, however, UHS may terminate such extended term without penalty at any time during the remainder of such extended term and for any reason or no reason on sixty (60) days prior written notice to Unisys.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
2
10. | Article 3 (Base Services) of the Agreement is hereby amended to add the following additional Section 3.19 (Quarterly Hardware and Software Review/Update): |
3.19 Quarterly Hardware and Software Review/Update . As part of the Base Services, Unisys shall provide to UHS written inventories of Machines and Software on a quarterly basis and upon expiration or termination of the Agreement and/or any ASR. The format of the report will be reasonably satisfactory to both Parties and will include, at a minimum, the owner or licensor of each item, the date the item was placed in service, the license term and expiration date, and the date of last update (e.g. software upgrade) to that item, in addition to such other information as reasonably requested by either Party. As part of the Base Services, the Parties further agree to formally jointly review and approve any updated inventories, and amend Exhibits 3 and 6 to the Agreement as necessary to reflect any updated information contained in such reports.
11. | Article 3 (Base Service) of the Agreement is hereby amended by adding the following Section 3.20 (Capacity), as follows: |
As part of the Base Services, Unisys shall provide UHS with maintained and commercially maintainable Machines and Software necessary to support a maximum of * * * of capacity of mainframe processing services throughout the Term of the Agreement, including any extension thereto. If UHS, in its sole discretion, desires to increase the capacity beyond * * * during the Term, including any extension, and for any reason, then UHS may, at its expense, acquire such additional equipment and software licenses as is necessary to support such additional capacity. As part of the Base Services, Unisys shall install and thereafter maintain throughout the Term and any extension thereto in the same manner as it maintains the Machines and Software, such additional equipment and software licenses as directed by UHS. Unisys agrees that, to the extent that any of the foregoing additional equipment and/or software licenses may be acquired by, from or through Unisys, * * *. Notwithstanding anything to the contrary in the Agreement, as between the Parties such additional equipment and software licenses shall be deemed the sole and exclusive property of UHS. Unisys shall not transfer or encumber, nor permit to be transferred or encumbered, such additional equipment and software licenses and shall secure such additional equipment and software licenses in the same manner and to the same degree as the Machines and Software, generally. The Parties agree that the only additional costs that UHS may be subject to for such additional capacity shall be the cost of acquiring the equipment and software licenses for such additional capacity in excess of * * * , together with any mutually agreed to in writing, reasonable, actual and auditable expenses directly incurred due to such additional capacity. Upon written request by Unisys, the Parties agree to discuss possible incremental staffing in relation to such increased capacity; provided, however, that any such increase in staffing shall be subject to the Parties mutual written agreement.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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12. | Article 10 (Service Locations), Section 10.02 (Security Procedures) is hereby deleted in its entirety and replaced by the following: |
As part of the Base Services, Unisys shall maintain and enforce at the Unisys Service Locations safety and security procedures that are at least (1) equal to industry standards for such Service Locations and (2) as rigorous as those procedures in effect at the UHS Service Locations as of the Effective Date. As part of the Base Services, Unisys shall provide at the Unisys Service Locations commercially reasonable (in the context of the health care industry) safety and security procedures to prevent unauthorized access to all software and equipment which process UHS Data, provided that Unisys shall not be responsible for any unauthorized access caused by the negligent or wrongful acts of UHS or its Agents. As part of the Base Services, Unisys and UHS shall jointly periodically review and update safety and security procedures at the Service Locations. Unisys shall implement administrative, physical, and technical safeguards agreed upon by the Parties in connection with Unisys provision of the Services that will reasonably and appropriately protect the confidentiality, integrity, and availability of all UHS Confidential Information, PHI and Personal Information, that is handled, accessed by, created, received, sent or maintained by Unisys and shall comply with the safety and security policies and procedures as may be reasonably required by UHS and its Affiliates, including those responsibilities, policies and procedures set forth in this Agreement and any ASR. The parties agree any modification to Unisys obligations under this Section 10.02 may or may not constitute a Change.
13. | Article 11 (Project Team), Section 11.03 (Key Employees) is hereby deleted in its entirety. |
14. | Article 13 (Proprietary Rights), Section 13.02 (Unisys Proprietary Software) is hereby deleted in its entirety and replaced by the following: |
13.02 Unisys Proprietary Software . The Unisys Proprietary Software shall be and shall remain the exclusive property of Unisys. UHS shall have no rights or interests in the Unisys Proprietary Software except as described in this Section 13.02 . Prior to using any Unisys Proprietary Software to provide any of the Services, Unisys shall notify UHS that it intends to use such Unisys Proprietary Software and obtain UHS prior written consent. If UHS does not provide such prior written consent, Unisys shall recommend a functionally equivalent alternative which Unisys shall use upon UHS prior written consent. The Account Executives will mutually determine the financial responsibility for any additional incremental costs of such functionally equivalent alternatives. As part of the Base Services, Unisys shall make available to UHS and its Affiliates Unisys Proprietary Software for use by UHS and its Affiliates solely in connection with the Services during the Term and any extension specifically provided for in Article 2.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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On the effective date of the expiration or termination of this Agreement, (in each case solely applicable to any Mainframe Services and/or ASR 04024) and receipt by Unisys of any applicable termination charge as provided for under Article 25 hereof (which termination charge only applies through February 28, 2006), at any time during the Term, including any extension thereto, and for any reason other than a termination under Section 24.04 hereof, Unisys agrees to assign and transfer and hereby assigns and transfers to UHS and its Affiliates any and all applicable licenses (and related license agreements) for the Unisys Proprietary Software relating to Mainframe Services and/or ASR 04024 which has been terminated or which has expired to UHS * * * . Unisys shall ensure such licenses shall be renewable by UHS or its Agents, as applicable, on commercially reasonable terms and rates through December 31, 2008. If within fifteen (15) calendar days of the effective date of termination under Section 25.01 or 25.02 herein such Unisys Proprietary Software licenses (and related license agreements) are not transferred by Unisys to UHS as required herein, then UHS shall be forever relieved of any obligation to pay Unisys any applicable termination charge. UHS may continue to use the Unisys Proprietary Software at no additional charge during the aforementioned fifteen (15) days, and such use shall be deemed to be compliant with the underlying license agreements. Unisys represents and warrants that (i) the license agreements and fees for the Unisys Proprietary Software include, and on transfer to UHS will include, commercially supported and available maintenance and (ii) during the Term, including any extension thereto, the Unisys Proprietary Software and the underlying license agreements shall remain transferable to UHS in accordance with the terms of this Section and without restriction.
With regard to any Unisys Proprietary Software which is not related to Mainframe Services and/or ASR 04024, Unisys shall offer to UHS a copy of, and hereby assigns and transfers to UHS and its Affiliates a non-exclusive, non-transferable (except to its assignees under Section 33.01(3) or to its Affiliates) license to use the Unisys Proprietary Software at commercially reasonable price, terms and conditions at such time as Unisys and its Agents cease to perform an applicable Service under this Agreement.
15. | Article 13 (Proprietary Rights), Section 13.03 (Unisys Third Party Software) is hereby deleted in its entirety and replaced by the following: |
13.03 Unisys Third Party Software . The Parties understand and agree that, as of the Amendment Effective Date, Unisys does not and, notwithstanding anything to the contrary contained in Section 3.05 hereof, for the remainder of the Term, including any extension thereto, shall not, without UHS prior written approval, provide any Unisys Third Party Software as part of the Services in connection with Mainframe Services and ASR 04024. In the event the Parties discover Unisys does provide Unisys Third Party Software as part of the Services in
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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connection with Mainframe Services and/or ASR 04024, Unisys shall take all necessary steps at its own expense to immediately transfer and assign to UHS such software license agreements relating thereto.
16. | Article 13 (Proprietary Rights), Section 13.05 (Developed Software) is hereby amended by adding the following additional language at the end of the Section: |
During the Term of the Agreement any extension under Article 2, Unisys shall promptly deliver any and all such Developed Software, including all related object and source code (and related documentation) to UHS promptly following completion of such Developed Software.
17. | Article 18 (Payments), Section 18.08 (Technology Improvements) of the Agreement is hereby deleted in its entirety and replaced by the following: |
18.08 Technology Improvements . UHS and Unisys acknowledge that significant hardware and software price and performance improvements which occur during the Term may result in greater savings in respect of the total costs of providing the Services than Unisys assumed in establishing the Charges. Within 180 days after the date 24 months from the Amendment Effective Date, the Parties shall review actual information technology trends during the previous calendar year based on objective third-party information. In the event that UHS believes that significant hardware and software price and performance improvements have occurred which are applicable to the Services and which have not been adopted by Unisys and if the Parties determine that they will realize significant cost savings as a result of the implementation of such new hardware and software improvements, Unisys and UHS shall determine an appropriate allocation of implementation expenses, determine an appropriate reduction to the Charges which reflects anticipated cost savings, and implement such new hardware and software improvements. In the event that the Parties cannot agree on specific reductions, the matter shall be submitted to the Executive Committee for dispute resolution pursuant to Article 28 .
18. | Article 22 (Confidentiality), Section 22.01 (Confidential Information) of the Agreement is hereby amended to include the following additional language at the end of the Section: |
While it is not contemplated under this Agreement that Unisys will have a need to use or disclose Protected Health Information or Personal Information (as those terms are defined below), in connection with providing services to UHS, in the event Unisys does, this section shall apply. In addition to its obligations of confidentiality under this Agreement, Unisys understands and acknowledges that it may receive from or create or receive on behalf of UHS Protected Health Information, as defined under the privacy regulations issued pursuant to the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and/or nonpublic personal information, as defined under the Gramm-Leach-Bliley Act and implementing regulations (GLB), during the performance of its obligations
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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under this Agreement. Unisys agrees to comply with any information privacy and security policies and standards of UHS that are disclosed by UHS to Unisys in writing and that are applicable to the aforementioned information. Except as otherwise specified herein, Unisys may use or disclosure Protected Health Information received from or created or received on behalf of UHS (PHI) and nonpublic personal information received from or created or received on behalf of UHS (Personal Information) solely to perform functions, activities, or services for, or on behalf of, UHS as specified in this Agreement. With regard to its use and/or disclosure of PHI or Personal Information, Unisys hereby agrees and represents and warrants to UHS that Unisys shall:
(a) Not use or further disclose any PHI or Personal Information other than as permitted by this Agreement.
(b) At all times maintain and use appropriate safeguards to prevent uses or disclosures of any PHI or Personal Information other than as permitted by this Agreement;
(c) Ensure that any subcontractor or agent to whom it provides any PHI or Personal Information agrees in writing to the same conditions and restrictions that apply to Unisys with regard to the PHI or Personal Information, including, without limitation, all of the requirements of this Section 22.
With regard to its use and/or disclosure of PHI, Unisys hereby agrees and represents and warrants to UHS that Unisys shall:
(a) Report promptly to UHS any use or disclosure of any PHI of which it becomes aware that is not permitted by this Agreement;
(b) Mitigate, to the extent practicable, any harmful effect that is known to Unisys of a use or disclosure of PHI by Unisys in violation of the requirements of this Agreement;
(c) In the time and manner designated by UHS, make available PHI in a Designated Record Set, to UHS, or as directed by UHS, to an individual, in order for UHS to respond to individuals requests for access to information about them in accordance with the HIPAA privacy regulation;
(d) In the time and manner designated by UHS, make any amendments or corrections to the PHI in a Designated Record Set that UHS directs in accordance with the HIPAA privacy regulation;
(e) In the time and manner designated by UHS, document such disclosures of PHI and information related to such disclosures as would be required for UHS to respond to a request by an individual for an accounting of disclosures of PHI in accordance with the HIPAA privacy regulations;
(f) In the time and manner designated by UHS, make available to UHS, or as directed by UHS, to an individual, the information documented in accordance with subsection (e) above, to permit UHS to respond to a request by an individual for an accounting of disclosures, in accordance with the HIPAA privacy regulations;
(g) In the time and manner designated by UHS or the Secretary of HHS, make its internal practices, books and records relating to the use and disclosure of PHI
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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available to UHS and to the Secretary of HHS for purposes of determining UHS compliance with the HIPAA privacy regulations.
Unisys agrees that this Agreement may be terminated in whole or in part by UHS upon written notice to Unisys in the event that UHS determines that Unisys has violated any material term of this section. Alternatively, UHS may choose to provide Unisys with written notice of the existence of an alleged material breach of this section and afford Unisys an opportunity to cure said breach upon mutually agreeable terms. Failure to cure, or a determination by UHS that cure is not practicable or possible, shall be grounds for the immediate termination of this Agreement. Unisys agrees to defend, indemnify and hold harmless UHS against any and all claims, liabilities, judgments or damages asserted against, imposed upon or incurred by UHS that arise out of any violation of this section.
Upon the termination of this Agreement for any reason, Unisys shall return to UHS or destroy all PHI and/or Personal Information, and retain no copies in any form whatsoever. This provision shall apply to PHI and/or Personal Information that is in the possession of subcontractors, vendors or agents of Unisys. Unless otherwise specified in this Agreement, all capitalized terms in this section not otherwise defined have the meaning established for purposes of Title 45 parts 160 and 164 of the United States Code of Federal Regulations, as amended from time to time. The Parties agree to take such action as is necessary to amend this Agreement from time to time as is necessary for UHS to comply with the requirements of HIPAA, the HIPAA privacy regulations, GLB and other federal and state privacy and consumer rights laws and regulations applicable to UHS. Unisys agrees to cooperate with and assist UHS in order for UHS to meet its obligations under applicable privacy laws and regulations. This section shall survive any termination of this Agreement. The terms and conditions of this section required by HIPAA shall be construed in light of any applicable interpretation of and/or guidance on the HIPAA privacy regulation issued by HHS from time to time. Any ambiguity in this Section shall be resolved in favor of a meaning that permits UHS to comply with applicable laws and regulations.
Notwithstanding anything to the contrary contained in this Section 22.01, UHS acknowledges and agrees that Unisys has no independent knowledge of the requirements of HIPAA or GLB or any regulations promulgated pursuant thereto. As a result, to the extent that any of the obligations of Unisys with regard to PHI or Personal Information are determined by, relate or refer to the provisions of HIPAA, GLB or any regulations relating thereto, Unisys shall be bound by any such obligation only if and to the extent that Unisys has been informed by UHS, in writing, (via policies and procedures or otherwise) of the requirements of such provision and the procedures that Unisys must follow in order to comply with such obligations. If and to the extent that, when so informed, Unisys determines that compliance with such obligations would be commercially unreasonable or unduly burdensome, Unisys shall so notify UHS and the parties shall work together in good faith to develop a mutually acceptable solution, including, without limitation, restricting Unisys access to the applicable PHI or Personal Information, if practicable.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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19. | Article 24 (Termination), Section 24.01 (Termination for Convenience) of the Agreement is hereby deleted in its entirety and replaced by the following: |
24.01 Termination for Convenience . The parties understand and agree that, at any time during the Term of this Agreement, including any extension thereto, UHS may terminate this Agreement, and/or any ASR entered into by the Parties prior to or on the Amendment Effective Date, for its own convenience in whole or in part, on ninety (90) days prior written notice to Unisys; provided, however, unless otherwise stated in the ASR, individual ASRs including ASR 04024 may not be terminated in part, and the Mainframe Services (excluding any Mainframe Services in any individual ASRs) may not be terminated in part. Notwithstanding anything to the contrary, in no event shall the aforementioned restriction limit any of UHS rights to increase or decrease its demand for Services under the Agreement. For example, and without limiting the generality of the foregoing, UHS may terminate the Agreement for convenience, effective as of March 1, 2006, by providing Unisys with written notice on or before November 30, 2005. Notwithstanding the foregoing, solely up until March 1, 2006, UHS may not terminate for convenience ASR 04024 unless UHS terminates the Mainframe Services, and UHS may not terminate the Mainframe Services unless it also terminates ASR 04024.
20. | Article 24 (Termination), Section 24.02 (Termination for Sale of Unisys) of the Agreement is hereby deleted in its entirety and replaced by the following: |
24.02 Termination for Change in Control of Unisys or Sale of Unisys Proprietary Software . In the event of a Change in Control of Unisys or sale of the Unisys Proprietary Software to any person or entity occurs, Unisys shall provide UHS written notice within ten (10 ) days thereof. UHS may terminate this Agreement and/or any ASR upon thirty (30) days prior notice to Unisys, if such notice is given within thirty (30) days of UHS receipt of written notice by Unisys of such a Change in Control or applicable sale. In the event that Unisys fails to provide the notice pursuant to this Section 24.02 , and fails to cure such breach within two days after receipt of notice from UHS, UHS may terminate this Agreement and/or any ASR immediately. For purposes of the Agreement, a Change in Control shall mean (a) the acquisition by any person, entity or group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Exchange Act), of beneficial ownership (as defined in the Exchange Act) of 30% or more of the outstanding shares of common stock of Unisys or the combined voting power of Unisys then-outstanding voting securities in a single transaction or series of related transactions; (b) a change in 75% or more of the directors of Unisys in any 12 month period; (b) a reorganization, merger, consolidation or share exchange in which the shareholders of Unisys immediately prior to such transaction hold less than 51% of the outstanding shares of Unisys after such transaction, and (c) the sale (in a single transaction or a series of related transactions) of all or substantially all of the assets of Unisys.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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21. | Article 24 (Termination) of the Agreement is hereby amended by adding the following Section 24.07 at the end of Article 24, as follows: |
24.07 UHS Termination Rights . The parties agree no termination of this Agreement shall include termination of any ASR unless such termination includes a specific reference to such ASR(s) and/or is a termination of the Agreement in its entirety.
22. | Article 25 (Termination Charge) of the Agreement is hereby deleted in its entirety and replaced by the following: |
ARTICLE 25.
TERMINATION CHARGE
25.01 Termination Charge Upon Termination for Convenience by UHS or for UHS Material Breach . In the event of a termination of Mainframe Services and ASR 04024, prior to March 1, 2006, for (a) convenience pursuant to Section 24.01 or (b) UHS material breach pursuant to Sections 24.03 and 24.04, UHS will, subject to Unisys compliance with all of its obligations under both Section 13.02 and Section 27(4) hereof, pay to Unisys, on the effective date of such termination, a termination charge in an amount as set forth on Exhibit 17. For the avoidance of any doubt, in no event shall this Section 25.01 be construed as creating any termination right for Unisys which does not already exist in the Agreement.
25.02 Termination Charge Upon Termination for Other Reasons . In the event of a termination of Mainframe Services and ASR 04024, prior to March 1, 2006, for any reason not set forth in Section 25.01 above, UHS will, subject to Unisys compliance with all of its obligations under both Section 13.02 and Section 27(4) hereof, pay to Unisys, on the effective date of such termination, a termination charge in an amount as set forth on Exhibit 17. . For the avoidance of any doubt, in no event shall this Section 25.02 be construed as creating any termination right for Unisys which does not already exists in the Agreement.
25.03 Termination Charge Upon Termination on or After March 1, 2006 by UHS . In the event UHS terminates this Agreement and/or any ASRs in effect as of the Amendment Effective Date on or after March 1, 2006, no termination charges shall apply.
23. | Article 27 (Exit Plan), Subsection (4) of the Agreement is hereby deleted in its entirety and replaced by the following: |
(4) upon UHS request at any time during the Term of the Agreement, including any extension thereto or upon termination or expiration of this Agreement, and/or any ASR, for any reason, and concurrent with any additional payment requirements under Sections 25.01 or 25.02 (which payment
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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requirements only apply through February 28, 2006), Unisys shall sell to UHS, its Affiliates or their designees, by providing an executed bill of sale listing the items being purchased in detail (Bill of Sale), the Unisys Machines used to provide the Mainframe Services and services under ASR 04024 (collectively, the Mainframe Machines, as is where is (except as otherwise provided in this Section 27(4)) (some or all, as designated by UHS in its sole discretion), * * * . At all times during the Term of this Agreement, including any extension thereto, Unisys shall ensure the Mainframe Machines must meet all of the following criteria: (a) be eligible for standard (not custom), commercially available maintenance for at least twelve (12) months after delivery to UHS; and (b) be free and clear of all liens, security interests or other encumbrances (Bill of Sale Criteria). Unisys represents and warrants that, (a) as of the Amendment Effective Date, the Mainframe Machines are free and clear of all liens, security interests and other encumbrances; and (b) the Mainframe Machines accurately reflect and will reflect the environment used by Unisys to perform the Mainframe Services and services under ASR 04024, whether by Unisys or by UHS or its Agents. If within fifteen (15) calendar days of the effective date of termination under Section 25.01 or Section 25.02 herein, such Mainframe Machines are not made available to UHS or otherwise do not meet the Bill of Sale Criteria, then UHS shall be forever relieved of any obligation to pay Unisys any termination charge or other amount(s) related to the transfer of the Mainframe Machines. UHS may use the Mainframe Machines, free of any additional charge, during the aforementioned fifteen (15) days. For purposes of this Section 27(4), the term Mainframe Machines shall be deemed to include any functionally equivalent machines and/or equipment to the extent that the Mainframe Machines are unavailable or otherwise fail to meet the Bill of Sale Criteria. With regard to Unisys Machines which are not Mainframe Machines, upon UHS request, Unisys shall sell to UHS or its designee such assets free and clear of all liens, security interests or other encumbrances, at market rates.
24. | Article 30 (Damages), Section 30.03 (Performance Credits) of the Agreement is hereby deleted in its entirety and replaced by the following: |
30.03 Termination for Failure to Meet On-Line Availability SLA . If Unisys fails to meet the COSMOS On-line Availability SLA goal for four (4) months, consecutive or non-consecutive, in any rolling twelve (12) months during the Term, UHS may, upon notice to Unisys, terminate this Agreement immediately in whole or only the Mainframe Services and/or ASR 04024 without regard to Section 24.03. Notwithstanding the foregoing, Unisys and its Agents shall cooperate with UHS and its Affiliates to respond to customer and provider complaints or concerns in connection with Unisys performance or non-performance of Services under this Agreement and shall effectuate a prompt work-around or other solution to the extent necessary to address satisfactorily such complaints or concerns. In the event that the root cause of the failure to meet the COSMOS On-line Availability SLA is due to required capacity above * * * that has not been acquired by UHS per Section 3.20 of this Agreement, the failure will not apply.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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25. | Article 33 (Miscellaneous Provisions), Section 33.01 (Assignment and Change of Control) is hereby deleted in its entirety and replaced by the following: |
33.01 Assignment and Change in Control .
(1) | This Agreement shall be binding upon and shall inure to the benefit of each Party hereto, its successors and assigns; provided, however, neither Party may assign this Agreement or any of its rights or obligations hereunder without the consent of the other Party and any attempted assignment shall be void, except that, subject to possible termination rights, either Party may assign its rights under this Agreement or any of its rights or obligations hereunder without the consent of the other Party pursuant to a Change in Control. |
(2) | In the event of a Change in Control of UHS, the Parties (including any successor or assignee of UHS) shall review the Services being provided under this Agreement and shall determine any mutually acceptable and appropriate adjustment(s) to the Services and Base Charges to meet UHS changing business requirements. Notwithstanding the above, no such Change in Control of UHS may result in a reduction of the Base Charges prior to March 1, 2006. |
(3) | In addition to the foregoing, UHS may assign all or any part of this Agreement to any purchaser of all or any part of the UHS mainframe application known as COSMOS including but not limited to the sale of all or any part of the mainframe application; provided, however, that any assignment of the Mainframe Services and/or ASR 04024 must be made in whole. Assignment by UHS under this Section 33.01(3) to any third party is subject to the prior written consent of Unisys, which consent will not be unreasonably withheld. |
(4) | Notwithstanding Subsection (1), above, Unisys may assign Unisys right to receive payments only under this Agreement; provided, however, that any such assignment (a) will not increase the number of payments or amounts due from UHS, (b) will be subject to any claims and offset rights as well as UHS right to receive payment for unused credits of UHS, (c) will not affect any of UHS rights or remedies under this Agreement and (d) will not result in the placement of any lien, security interest or other encumbrance on the Mainframe Machines. Unisys shall notify UHS of any intent on the part of Unisys to assign its right to receive payments under this Agreement and the identity of the assignee. Unisys shall be obligated to continue to interact directly with UHS, with no assignee involvement, on all matters related to any assigned payment rights, including any actions taken to collect past due amounts, whether alleged or otherwise. |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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Unisys, on behalf of itself, its Affiliates and its Agents, shall indemnify and hold UHS, its Affiliates and its Agents harmless from any liability, damages or expenses, including reasonable attorneys fees, arising out of or relating to (a) any dispute between Unisys, its Affiliates or its Agents and any assignee(s) of such right to receive payments; and (b) any dispute between UHS, its Affiliates or its Agents and any assignee(s) of such right to receive payment in connection with any payment otherwise subject to dispute, offset or other claim or right of UHS under the Agreement. Any such indemnification shall be treated in accordance with Article 29 of the Agreement. |
26. | Article 33 (Miscellaneous Provisions), Section 33.02 (Notices) of the Agreement is hereby amended to include the following revised contact information: |
In the case of UHS:
United HealthCare Services, Inc.
6150 Trenton Lane North
Plymouth, Minnesota 55442
Attn: James Gasper, Director of Vendor Management for Computer
Services, UnitedHealth Technologies
FAX: 763.744.1783
For default or termination, with a copy to:
United HealthCare Services, Inc.
9900 Bren Road East
Minnetonka, Minnesota 55343
Attn: David Lubben, General Counsel
FAX: 952.936.0044
And to
United HealthCare Services, Inc.
9900 Bren Road East
Minnetonka, Minnesota 55343
Attn: Colleen Schmid, Associate General Counsel
FAX: 952.936.1745
In the case of Unisys:
Unisys Corporation
3900 Paramount Parkway
Suite 250 South
Morrisville, North Carolina 27560
FAX: 919.468.2830
Attn: Ken Hadzinski
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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27. | Article 33 (Miscellaneous Provisions) of the Agreement is hereby amended to include the following additional Section 33.18 titled External Access: |
33.18 External Access . This section establishes the terms and conditions and procedures of Unisys access to certain of UHS Systems noted on the Security Form (United IS).
(1). Method of Access . Unisys shall have access to United IS by the following methods:
| At a UHS Site using UHS owned or leased equipment. |
| As otherwise mutually agreed to by the Parties. |
(2). System Users . As part of the Agreement, Unisys shall identify to UHS the Unisys employees Unisys believes will need to have access to United IS under the Agreement (System Users). UHS will provide each System User with a hard copy of the UHS customer administration request form that is used by UHS to process adds, changes and deletes regarding access to the United IS, which is located in the UHS Lotus Notes database (the Security Form). The UHS designated contact will forward the completed Security Form to the UHS security group for processing. Unisys shall provide UHS the information regarding each System User reasonably required by UHS, including, but not limited to, the United IS each System User will access and the method of each System Users access to United IS. Unisys will not provide social security numbers or other Unisys or personal confidential information to UHS.
Unisys shall promptly notify UHS of any System Users who cease to require access to United IS as a result of a change of responsibilities and/or leaving Unisys employment. UHS may terminate any System Users access to United IS in the event UHS has good faith reason to believe such access is not authorized, or access must be terminated in order to prevent damage to UHS. Unisys is responsible for a System Users non-compliance with the terms of this Agreement. Unisys subcontractors shall be deemed System Users under the terms of the Agreement.
In the event UHS terminates a Unisys System Users access to the United IS for any reason other than (1) a material breach of the Agreement or (2) a force majeure event, and such access is necessary for Unisys to perform the Services, the Parties will mutually agree to either (1) develop an alternative means to access the data on the United IS that is necessary for Unisys to perform the Services or (2) delay the delivery of any deliverables under the Agreement, with no contractual penalty being assessed against Unisys.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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(3). Limitations on Unisys Use of Access to United IS . Unisys shall not use its access to United IS for any purposes not authorized by an Agreement.
(4). No Software License Granted and Ownership . The access to United IS granted to Unisys under the Agreement is limited to granting Unisys access to the United IS and does not and shall not be construed as granting Unisys a license for the use of the software programs contained in the United IS. Any license to the software programs contained in United IS shall be pursuant to a separate license agreement between the Parties. Unisys shall not and shall not attempt to reverse engineer or otherwise obtain copies of the software programs contained in United IS or the source code of the software programs contained in United IS.
(5). UHS represents and warrants to Unisys that it either owns and/or has rights to the United IS and it owns or has rights to allow Unisys to access and use the software and applications on the United IS solely for the purposes set forth in the Agreement. This section to the Agreement does not transfer title to or ownership to rights to United IS or to rights in patents, copyrights, trademarks and trade secrets encompassed in the United IS to Unisys.
(6). Deletion and Disposal . Upon expiration or termination of access hereunder, Unisys shall return all UHS information back to UHS, and ensure that (unless otherwise requested by UHS) all UHS information is securely disposed of and permanently erased from Unisys systems.
(7). Exchange of Confidential Information . The parties agree to utilize a secure method of transmission when exchanging confidential information electronically (e.g. secure e-mail).
(8). Site Outage . Unisys shall report to UHS any/all Unisys site outages promptly where such outage may impact UHS or Unisys ability to fulfill its obligations to UHS.
28. | Article 33 (Miscellaneous Provisions) of the Agreement is hereby amended to include the following additional Section 33.19 titled Source Code Escrow: |
33.19 Source Code Escrow . During the Term of the Agreement and any extension, Unisys agrees, at UHS cost (which shall be commercially reasonable), to maintain the Source Code (defined below) to the Unisys Proprietary Software (the Unisys Source Code) in escrow with Data Securities International, Inc. (DSI) and, subject to an Escrow Agreement (the Escrow Agreement) attached hereto as Exhibit 35 signed by Unisys, UHS and DSI. The version maintained at all times, shall be the version used by Unisys to provide Services to UHS so that if a release event occurred, UHS could operate without interruption. Unisys shall also deposit under the Escrow Agreement the Source Code to any updates, changes, alterations, or modifications to the Unisys Proprietary Software as they are made, so as to be current with the version operated by Unisys for the benefit of UHS. UHS may only access the Unisys Source Code in the event that any of
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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the release conditions set forth in Section 4 of the Escrow Agreement (except for 4.1(a)) and/or any of the following permanent release conditions, and notwithstanding anything to the contrary in the Escrow Agreement, release shall not be subject to objection or contrary instructions by Unisys:
(i) Upon termination of the Agreement for Change in Control of Unisys (Section 24.02);
(ii) In the event Unisys discontinues (or UHS is unable to acquire) standard, commercially available maintenance for the Unisys Proprietary Software version used by or for the benefit of UHS, on commercially reasonable terms and conditions and pricing; or
(iii) In the event that Unisys fails to carry out maintenance or support obligations (or is relieved of its obligations to do so under a force majeure event) with respect to the Unisys Proprietary Software imposed on it pursuant to the Agreement or Exhibit 1.
UHS shall have the right at any time to verify the Deposits made to DSI by Unisys, and Unisys shall provide UHS all information and assistance, including object code versions of the Unisys Proprietary Software, to do so, at no cost to UHS.
Unisys hereby grants to UHS a paid-up, non-exclusive, royalty-free, non-transferable (except to its assignees under Section 33.01(3) or to its Affiliates), worldwide, license for the remaining term of the related software license to alter copy and use the Source Code to support its license of the Software as set forth in this Agreement and to authorize third parties to exercise such rights in each case solely for the benefit of UHS. Such license shall be at least as broad as the license to the object code. UHS agrees, however, to forbear from accessing and using the Source Code until such time as UHS is entitled, in accordance with this Agreement, to the release of the Source Code out of escrow. UHS shall have the right, if necessary, to reverse engineer the Unisys Proprietary Software solely as necessary to support its use thereof.
For purposes of this Section 33.19, Source Code shall mean the computer program expressed in a source or human readable language consisting of a full source language statement of the program comprising the Unisys Proprietary Software and documentation necessary to allow a reasonably skilled programmer or analyst to maintain and enhance the Unisys Proprietary Software without the assistance of Unisys or reference to other material.
Unisys agrees to amend its Escrow Agreement to comply with the requirements outlined in this Section 33.19, no later than May 1, 2004, and such amendment shall be subject to UHS approval, which shall not be unreasonably withheld.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
16
The parties agree that Section 33.16 (Solicitation) shall not apply to UHS in the event and to the extent UHS obtains the Source Code and desires to retain Unisys personnel to assist UHS with the Source Code.
29. | Article 33 (Miscellaneous Provisions) of the Agreement is hereby amended to add the following additional Section 33.20: |
33.20 Revisions to Exhibits . The parties agree that, for ease of the Parties, Exhibits may be revised from time to time during the Term, by revising the applicable Exhibit as well as completing and both parties executing the Revision Log (in the form attached hereto as Exhibit 34) for the applicable Exhibit.
The parties agree to treat facsimile copies of signatures on this Amendment as originals. In the event of inconsistencies between the Agreement and this Amendment, the terms and conditions of this Amendment shall be controlling. Unless specifically modified or changed by the terms of this Amendment, all terms and conditions of the Agreement shall remain in effect and shall apply fully as described and set forth in the Agreement.
Accepted by: |
Accepted by: | |||||||
Unisys Corporation |
United HealthCare Services, Inc. | |||||||
By: |
|
By: |
|
|||||
Name: |
|
Name: |
|
|||||
Title: |
|
Title: |
|
|||||
Date: |
|
Date: |
|
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
17
ATTACHMENT 1
LIST OF EXHIBITS
Exhibit 1 | Base Services | |
Exhibit 2 | Applications Software | |
Exhibit 3 | Systems Software | |
Exhibit 4 | Transition Plan INTENTIONALLY DELETED | |
Exhibit 5 | Performance Credits INTENTIONALLY DELETED | |
Exhibit 6 | Hardware Inventory | |
Exhibit 7 | Customer Satisfaction Survey INTENTIONALLY DELETED | |
Exhibit 8 | Service Locations | |
Exhibit 9 | Key Employees INTENTIONALLY DELETED | |
Exhibit 10 | UHS Competitors | |
Exhibit 11 | Base Charges | |
Exhibit 12 | Disaster Recovery Services | |
Exhibit 13 | Audit Procedures | |
Exhibit 14 | UHS Travel Expense Policy | |
Exhibit 15 | Subcontractors | |
Exhibit 16 | Termination Assistance Services | |
Exhibit 17 | Termination Charges | |
Exhibit 18 | Application Resource Request and Rates | |
Exhibit 19 | Resource Usage Reports and Data | |
Exhibit 20 | Form of Performance Report | |
Exhibit 21 | Strategic Plan INTENTIONALLY DELETED | |
Exhibit 22 | Procedures Documentation Outline |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
18
Exhibit 23 | Change Control Procedures Outline INTENTIONALLY DELETED | |
Exhibit 24 | UHS Affiliates | |
Exhibit 25 | Deliverables INTENTIONALLY DELETED | |
Exhibit 26 | Service Level Agreements and Performance Standards | |
Exhibit 27 | U.S. Government Contract Requirements | |
Exhibit 28 | Transitioned Employee Letter Agreement INTENTIONALLY DELETED | |
Exhibit 29 | UHS Employee List INTENTIONALLY DELETED | |
Exhibit 30 | COLA INTENTIONALLY DELETED | |
Exhibit 31 | Variable Pricing Mechanism INTENTIONALLY DELETED | |
Exhibit 32 | Information Security Policies and Procedures | |
Exhibit 33 | Additional Service Requests | |
Exhibit 34 | Exhibit Log | |
Exhibit 35 | Escrow Agreement |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
19
|
Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
2004 Contract Exhibit Note
Section I, Base Services and Section II, Function and Scope Matrix have been merged into a single section.
Detailed responsibilities for each of the following functional areas are defined in this exhibit. Capacity based services include providing Unisys host mainframe processing and storage resource to run applications in the UHS production environment. Services not specified are assumed to be the responsibility of UHS.
| Operations |
| Production Control |
| Security |
| Unisys Technical Services |
| Disaster Recovery |
| Unisys Database Administration |
| Help Desk Services |
| Communications |
| Print Services |
| Outside Media Services |
| Financial and Asset Management |
| UNIX Support |
| Account Management |
Responsibility Key
X - Responsible The party identified has full responsibility for performing this function.
P - Primary This party has responsibility for performing the function and obtaining concurrence from the other party.
S - Secondary This party provides input to and collaborates with the party responsible for the function.
Page 1 of 19
|
Information Technology Services Agreement |
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||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Operations
Includes responsibilities such as console operations, batch support, tape management, backups, documentation, problem resolution, and hardware installation necessary to maintain the system. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Operate Console |
X | |||
Command Center Automation Tools |
||||
Define and maintain business process documents |
X | |||
Define requirements |
X | |||
Define command center requirements |
X | |||
Implement Automation Programs |
X | |||
Perform automated monitoring |
X | |||
Batch |
||||
Define batch process flow |
X | |||
Batch Monitoring |
X | |||
Batch Abend Repair |
P | S | ||
Batch Abend Escalation |
P | S | ||
Tape Management |
||||
Mount Tapes |
X | |||
Out of Company Tape Processing |
X | |||
Off site storage |
X | |||
Tape Library management |
X | |||
Tape Initialization |
X | |||
Silo Management |
X | |||
First Line problem determination |
X | |||
File Back-up/Recovery Assistance (including database recovery) |
X | |||
Document Operations Procedures |
P | S | ||
Hardware Planning and Installation |
||||
Technology in-put, review, and general recommendation |
P | S | ||
Technology plan review |
P | S | ||
Technology plan approval |
S | P | ||
Hardware facilities requirements |
X | |||
Hardware installation and maintenance |
X | |||
Facilities Management |
||||
Building Management |
X | |||
Environmental Management |
X | |||
Space Planning Assistance |
X | |||
Testing and concurrent maintenance |
X | |||
Report of Problem Management |
X | |||
Failure Recovery |
||||
Service Center/Data Network Machine Failure |
||||
Service Center Equipment (up to but not incl. remote FEP) |
X | |||
Data Network Equipment (incl. and beyond remote FEP) |
X | |||
Systems software failure |
X | |||
Applications Software failure |
X |
Page 2 of 19
|
Information Technology Services Agreement |
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||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Production Control
Includes responsibilities such as planning, analysis, tool support, WFL support, and problem management necessary to support the production schedule. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Establish Standards |
P | S | ||
Standards compliance |
X | |||
Operations analysis and planning |
X | |||
Support scheduling software |
X | |||
Batch Production Schedule |
||||
Scheduler input |
P | S | ||
Scheduler updates |
X | |||
Execution |
X | |||
Process Special Requests |
X | |||
WFL creation, support and hang fixing |
X | |||
Track Batch Problem Reports and System Crashes |
X | |||
Report Problem Resolution Statistics |
X | |||
Preparation of Run parameter Cards |
P | S |
Page 3 of 19
|
Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Security
Unisys will provide, in accordance with UHS policies and procedures, and requirements, physical security in the Unisys Service Center location and will be the custodian of the security files providing the required backup and recovery services. Unisys will also be responsible for making UHS requested changes to the security software system. The security administration for hosts and applications will be the responsibility of UHS, i.e. administration of user codes and logons. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Physical Security at UHS Facilities |
||||
Administrative and technical support |
X | |||
Badge distribution, alarm monitoring and response |
X | |||
Emergency response (fire, medical, first aid) |
X | |||
Physical Security at Unisys Facilities |
||||
Administrative and technical support |
X | |||
Badge distribution, alarm monitoring and response |
X | |||
Emergency response (fire, medical, first aid) |
X | |||
Logical Security Management (a component of which is data access/administration of user ids and passwords) |
||||
Conduct Periodic Audit |
X | X | ||
Host/Mainframe installation & maintenance |
X | |||
Host/Mainframe upgrades |
X | |||
UNIX installation & maintenance |
X | |||
UNIX upgrades |
X | |||
Maintain master security database (Security DB Utility/RACF) |
X | |||
Administrative support (host/mainframe system software) |
X | |||
Administrative support (application software) |
X | |||
User Password authorization policy |
X | |||
Data access/administration of user ids and passwords |
X | |||
Network firewall management, intrusion detection and related escalation procedures |
X | |||
Data Network - dual responsibility |
||||
Network definitions (dual responsibility) |
X | X | ||
User lists |
X | X | ||
User initialization |
X | X | ||
Policy & Procedures |
X | |||
Procedures |
S | P | ||
Security Enhancement |
||||
Security consultancy |
X | X | ||
Identify areas for improvement |
X | X | ||
Recommend solutions |
X | X | ||
Security Management |
||||
Maintain the security operating system software. |
X | |||
In conjunction with UHS, review security policies and procedures for effectiveness and recommend improvements. |
X | X | ||
Review and implement changes made or requested by UHS to its security policies and standards in accordance with the ASR process. |
P | S | ||
Maintain and update the information security procedures for UHS. |
X | |||
Unisys should notify UHS of any security violations, both physical and logical in nature, that Unisys detects or becomes aware of during the Term and will provide commercially reasonable assistance to UHG for investigation and corrective actions necessary to remedy the violation and prevent reoccurrence. |
X | |||
Provide a UHS focal point with responsibility for day-to-day security management. |
X | |||
Provide Unisys with UHS security audit history (both internal and external) and security policies, standards and practices in effect as of the Effective Date and any updates as they occur. |
X |
Page 4 of 19
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Information Technology Services Agreement |
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||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Security
Unisys will provide, in accordance with UHS policies and procedures, and requirements, physical security in the Unisys Service Center location and will be the custodian of the security files providing the required backup and recovery services. Unisys will also be responsible for making UHS requested changes to the security software system. The security administration for hosts and applications will be the responsibility of UHS, i.e. administration of user codes and logons. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Communicate the security procedures to end users (for example, login procedures, password requirements, use of anti virus programs, data and equipment security procedures). |
X | |||
In conjunction with Unisys, review UHS security policies and procedures for effectiveness and recommend improvements. |
S | P | ||
Notify Unisys of changes UHS plans to make to its security policies and standards before implementation via the UHS change and problem management process. |
X | |||
Physical Security |
||||
Provide physical security controls at Unisys facilities |
X | |||
Restrict access to data processing areas to authorized personnel only where Unisys has security responsibility. |
X | |||
Restrict access to data processing areas to authorized personnel only where UHS has security responsibility. |
X | |||
Conduct periodic reviews of the data processing areas for which Unisys has security responsibility including reviews of access logs for unusual occurrences and perform follow-up activities in accordance with the procedures specified in the information security procedures for UHS |
X | |||
Provide secure storage for removable storage media under Unisys control. |
X | |||
Provide physical security controls at the UHS Service Locations. |
X | |||
Protect LAN servers and infrastructure devices on UHS premises from unauthorized access. |
X | |||
Logical Access Control |
||||
Provide annually to UHS for re-verification a list of existing UHS system logon IDs. |
X | |||
Review and verify annually the system logon IDs for Unisys personnel and request delete the IDs of those individuals no longer authorized by UHS to access the system. |
X | |||
Delete individual logon IDs no longer authorized. |
X | |||
Based on information provided by UHS, delete the system logon IDs of those individuals no longer authorized by UHS to access the system. |
X | |||
Install, maintain and upgrade new or existing data access control software, as deemed necessary by Unisys to provide the Services. |
X | |||
Implement the functions and features of the access control software that will satisfy UHS security practices as defined in the information security procedures for UHS. |
X | |||
Implement the security system values and features of the supported operating systems that satisfy UHS security practices as defined in the information security procedures for UHS. |
X | |||
Identify the protection requirements for operating system resources. |
P | S | ||
Implement the protection requirements for operating system resources via the access control software with all changes being scheduled and performed in accordance with the change management process. |
X | |||
Capture and maintain audit records for a mutually agreed retention period, and provide record retention reports to the UHS project executive upon reasonable request. |
X | |||
Promptly inform UHS of any security issues as Unisys becomes aware and recommend possible remedial action. |
X | |||
Schedule and notify UHS through the change management process of security or integrity software fixes that must be applied to the systems for which Unisys has security responsibility. |
X |
Page 5 of 19
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Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Security
Unisys will provide, in accordance with UHS policies and procedures, and requirements, physical security in the Unisys Service Center location and will be the custodian of the security files providing the required backup and recovery services. Unisys will also be responsible for making UHS requested changes to the security software system. The security administration for hosts and applications will be the responsibility of UHS, i.e. administration of user codes and logons. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Periodically review privileged user authorities and request removal of those for which UHS authorization no longer exists. |
X | |||
Control and be responsible for the security officer/security administrator user profiles on those systems for which Unisys has security responsibility. |
X | |||
Review and verify annually the system logon IDs for UHS personnel (i.e., re-verification) and notify Unisys to delete the IDs of those individuals who no longer have a business need and/or are no longer authorized by management to access the system. |
X | |||
Maintain the procedures used to identify User IDs to be deleted or modified. |
X | |||
Define and provide to Unisys: data classification and control criteria, data protection and handling requirements, and data encryption requirements; |
X | |||
Promptly acknowledge receipt of security exposures notified to UHS by Unisys and inform Unisys of UHS acceptance or rejection of Unisys recommended remedial action or other remedial action UHS implements. |
X | |||
Take appropriate corrective action to remedy security violations notified to UHS by Unisys. |
X | |||
Define and implement the protection requirements for Application Software resources via the access control software. |
X | |||
Define and implement the protection requirements for End User data via the access control software. |
X | |||
Establish the process criteria for resetting passwords and disclosing such passwords to authorized personnel. |
X | |||
Implement and maintain security controls for those subsystems and Software that do not use the access control software for their security. |
X | |||
Establish, change, deactivate, and remove logon IDs and associated access authorities for UHS and Unisys personnel. |
X | |||
Reset logon ID passwords for UHS and Unisys personnel and disclose such passwords to authorized personnel. |
X | |||
Review, approve, and grant requests for privileged user authorities. |
X | |||
Data Network |
||||
Manage and maintain all firewalls and gateway devices that connect the Unisys Data Network to the UHS Data Network that Unisys requires to provide the Services. |
X | |||
Approve end user access/ revocation to network, Application Software, systems, and modem access |
X | |||
Implement access requests, access rights lists, and passwords. |
X | |||
UHS will identify all dial-in services and inter enterprise gateway services and the authorized users of such services. |
X |
Page 6 of 19
|
Information Technology Services Agreement |
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||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Unisys Technical Services
Includes responsibilities such as operating system installation and support, problem resolution, performance monitoring and tuning, and product support to upgrade and maintain the system. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Operating Systems Support (Installation and maintenance) |
||||
A Series System Software (i.e., MCP, COMS, DMSII, etc.) |
X | |||
New Release evaluation |
X | |||
Interim Correction Release evaluation |
X | |||
Test new ClearPath System Software releases (i.e. MCP, COMS, DMSII, CCF, etc.) on Unisys owned platforms using Unisys to ensure software compatibility |
X | |||
Test new ClearPath System Software releases (i.e. MCP, COMS, DMSII, CCF, etc.) on Unisys owned CCF test bed using Unisys developed scripts to ensure software compatibility |
X | |||
Test new ClearPath System Software releases (i.e. MCP, COMS, DMSII, CCF, etc.) on UHS Development/Test environments to ensure software compatibility |
X | X | ||
New release installation |
X | |||
Supervisor Support |
X | |||
Other host software (3rd party) |
X | |||
Custom Connect Facility (CCF) distributed A |
||||
Installation and maintenance |
X | |||
CCF Testing |
||||
Script engine jointly developed by UHS and Unisys |
X | X | ||
Tests run on 2 Unisys owned ClearPath systems in Eagan |
X | |||
Scripts have evolved over time. As new failures are found in production those test cases are added |
X | |||
Test are automated but still require an FTE when testing is in progress |
X | |||
Leverage existing resources to provide the necessary manpower |
X | |||
Troubleshooting/problem resolution (i.e., MCP, System Soft, Env Soft.) |
||||
Evaluation of problem |
X | |||
Problem Drill down to root cause |
X | |||
Service Center Automation Product Support (Installation and maintenance) |
||||
Tape Library |
X | |||
File Management |
X | |||
Print Management |
X | |||
Source Code Control |
X | |||
Scheduling |
X | |||
Performance Monitoring |
X | |||
Operations Automation |
X | |||
Technical Product Support (Installation and maintenance) |
||||
Print Support (i.e., ISC Spool) |
X | |||
Code Generation (i.e., XGen) |
X | |||
PC/File transfer (i.e., FileExpress) |
X | |||
Data Transfer (i.e., Data Bridge) |
X | |||
Utilization Reporting (i.e., ResourceDB) |
S | P | ||
Print Barcode Application |
X | |||
Print Forms Design Utility |
X | |||
Business Application Program Modules (TB7500) |
X | |||
WFL Development and support |
||||
Design Support |
S | P | ||
Implementation (release) |
S | P | ||
Testing |
S | P | ||
Evaluation of problem |
P | S | ||
Problem Drill down to root cause |
P | S | ||
Operational Analysis and Problem Resolution |
P | S |
Page 7 of 19
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Information Technology Services Agreement |
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||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Unisys Technical Services
Includes responsibilities such as operating system installation and support, problem resolution, performance monitoring and tuning, and product support to upgrade and maintain the system. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Workflow Development/Support |
P | S | ||
Scheduling |
P | S | ||
Capacity Planning (applications) |
S | P | ||
Performance Monitoring and Tuning Production Only |
||||
Performance Thresholds Alert setup and monitoring |
X | |||
System Monitoring |
X | |||
Environmental (Distributed A) |
X | |||
Applications Performance Analysis |
S | P | ||
Performance Reporting |
X | |||
System Capacity Planning (day to day) |
P | S | ||
File/Tape Management |
||||
Backup/recovery procedures |
X | |||
Monitor Available Disk Space |
X | |||
Define File/Tape Retention Parameters |
S | P | ||
Configure/Implement File/Tape Retention Parameters |
X | |||
File/Tape Mount Management |
P | S | ||
New Technology/Product Research |
||||
Technology input and review |
S | P | ||
Technology implementation |
P | S | ||
Technology selection |
P | S | ||
Security Administration |
||||
Security Policy and Procedures |
X | |||
User ID Administration |
X | |||
Router Configuration/Parameters/Databases |
X | |||
Security Application ALGOL Code |
X | |||
Security Application XGEN COBOL Code |
X | |||
Quality Assurance |
||||
Application Installation |
||||
Actual installation |
P | S | ||
User acceptance and verification |
S | P | ||
Define and Develop Standards and Procedures |
S | P | ||
Define requirements |
S | P | ||
Promote to production |
P | S | ||
WFL standards and procedures |
P | S | ||
Automated Run Documentation |
S | P | ||
Set-up |
S | P | ||
Dependencies |
S | P | ||
Initiation |
S | P | ||
Recovery |
S | P | ||
Hardware & System Software Installation |
||||
Actual installation |
P | S | ||
User acceptance and verification |
P | S | ||
Define and Standards and Procedures |
P | S | ||
Define requirements |
P | S | ||
Promote to production |
P | S | ||
Develop Service Level Agreements |
S | P | ||
Service Level Management (day to day) |
P | S | ||
Capacity management (day to day) |
||||
Define and maintain capacity management process documents |
P | S | ||
Define application requirements |
X | |||
Capacity monitoring |
P | S | ||
Storage management (DASD, tape) |
P | S | ||
Maintain Optimal Storage Environment (cost, service) |
P | S |
Page 8 of 19
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Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Disaster Recovery
Includes responsibilities such as disaster plan maintenance, disaster recovery testing, and implementation of the plan in the event of a disaster necessary to restore service. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Disaster Recovery Planning |
||||
Define Application Disaster Recovery Levels |
X | |||
Disaster Recovery Plan Development and Maintenance |
S | P | ||
Contract Maintenance |
X | |||
Administration (compliance, guidelines, standards, procedures) |
S | P | ||
Testing |
S | P | ||
Tapes to Hot Site (from vault) |
X |
Page 9 of 19
|
Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Unisys Database Administration
Includes responsibilities such as software installation and support, logical and physical data design, database backups, and monitoring necessary to support and maintain the test and production workloads. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
DMSII Production Environment |
||||
Install DMSII Software |
X | |||
Monitor and control DMSII environment |
X | |||
Physical data base design |
P | S | ||
Logical database design |
S | P | ||
Review and support application DML |
X | |||
Maintain production DASDL and generate Description |
P | S | ||
Determine database space requirements |
P | S | ||
Ensure data base physical integrity (backup/recovery) |
P | S | ||
Identify and resolve application performance problems |
S | P | ||
Monitor and tune database performance |
X | |||
Identify database backup cycle requirements (type, frequency, occurrence) |
P | S | ||
Support and perform database backup process |
X | |||
Identify and resolve DMSII related software problems |
X | |||
24 X 7 database support coverage |
X | |||
Automation/Tool utilization |
X | |||
DMSII storage management (Structure and population growth) |
X | |||
Database standardization |
P | S | ||
DMSII Test Environment |
||||
Install DMSII Software |
X | |||
Monitor and control DMSII environment |
X | |||
Physical data base design |
P | S | ||
Logical database design |
S | P | ||
Review and support application DML |
X | |||
Maintain production DASDL and generate Description |
P | S | ||
Determine database space requirements |
P | S | ||
Ensure data base physical integrity (backup/recovery) |
P | S | ||
Identify and resolve application performance problems |
S | P | ||
Monitor and tune database performance |
X | |||
Identify database backup cycle requirements (type, frequency, occurrence) |
P | S | ||
Support and perform database backup process |
X | |||
Identify and resolve DMSII related software problems |
X | |||
24 X 7 database support coverage |
X | |||
Automation/Tool utilization |
X | |||
DMSII storage management (Structure and population growth) |
X | |||
Database standardization |
P | S | ||
DBMS capacity planning |
||||
Applications requirements |
X | |||
Physical Estimation Process |
X | |||
DBA Functions |
||||
DBMS performance management |
S | P | ||
DBMS performance utilization tracking |
X | |||
Backup/recovery planning and design |
X | |||
Involvement with application installation |
S | P | ||
DB Reorganization |
X | |||
DB Space Management and Monitoring |
X | |||
Database troubleshooting/resolution |
X | |||
DB Rollbacks and Recoveries |
X |
Page 10 of 19
|
Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Help Desk Services
Includes responsibilities necessary for problem and incident management. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Level 1 Support |
||||
Answer calls from UHS users |
X | |||
Problem management (UHS Service Center Help Desk - Level 1) |
||||
Record problems |
X | |||
Track problems through resolution |
X | |||
Provide feedback to users |
X | |||
Initial problem support |
X | |||
Level 1 problem resolution |
X | |||
Invoke proper problem resolution resources |
X | |||
Follow-up for resolution status |
X | |||
Escalate to next level of support (network, app. level 2) |
X | |||
Standards and procedures (UHS help desk) |
S | P | ||
Notify users of systems availability |
X | |||
Management reporting - UHS level 1 and Internal Client SLA/s |
X | |||
Level 2 Support |
||||
Answers calls from UHS Help Desk |
X | |||
Problem Management (Unisys Help Desk) |
||||
Record problems |
X | |||
Track problems through resolution (UNISYS level 2) |
X | |||
Provide feedback to UHS Level 1 Help Desk |
X | |||
Level 2 problem resolution (in scope services) |
X | |||
Invoke proper problem resolution resources |
X | |||
Follow-up for resolution status |
X | |||
Escalate to next level of support |
X | |||
Standards and procedures UNISYS Help Desk |
X | |||
Notify UHS Help Desk of system availability |
X | |||
Integrate UHS Procedures into Unisys Help Desk Procedures |
P | S | ||
Management reporting - Level 2 |
X |
Page 11 of 19
|
Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Communications
Includes responsibilities such as support of routers and hubs necessary to provide connectivity to the UHS network. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Network Hardware Maintenance and support |
||||
Two CP2000s supporting tape label printing in Eagan |
X | |||
ClearPath Network Appliances used for 100mb and Gigabit access to NX and Libra hosts |
X | |||
NT40 servers used for 100mb access to NX hosts |
X | |||
Network Software |
||||
Configuration of Moves, Adds, Changes |
||||
NT4.0 Image used in ClearPath Network Appliance (CNA) |
X | |||
Windows XP Image when ClearPath Network Appliance (CNA) is upgraded to use XP |
X | |||
NNS (NT/CNA to NX/Libra interface software) |
X | |||
NAU |
X | |||
Maintenance and Support |
||||
NX/Libra (CNS, BNA, TCP/IP, NX/Libra Host name resolution)) |
X | |||
NAU |
X | |||
Any new or out-of-scope networking entities |
X | |||
Network Communications for Disaster Recovery |
X |
Page 12 of 19
|
Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Print Services
Includes responsibilities such as hardware support, software support, and file/report generation necessary to support printing. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Document Creation & Management |
||||
Composition Tools EOS at TIC |
X | |||
Document Viewing |
X | |||
Print Related Support Software |
||||
System Software |
X | |||
Transmission Software |
X | |||
Forms Management |
X | |||
Report Delivery Tracking |
X | |||
File/Report Transmission (both Hardware and Software) |
X | |||
Print/Report Generation |
||||
Queue Management |
S | P | ||
Printer Hardware |
X | |||
Physical Printing |
X | |||
Forms Management |
X | |||
Report Delivery Tracking |
X | |||
Print Delivery Metrics |
||||
Print File Availability to Printer Queue Management |
X | |||
Print/Report Delivery to Customer |
X | |||
Reporting Overall Metric |
X |
Page 13 of 19
|
Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Outside Services
Includes responsibilities to support microfiche and ID card services. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Microfiche |
||||
Spool microfiche output to tape |
X | |||
Ship microfiche tape(s) to services vendor |
X | |||
Receive/verify microfiche output |
X | |||
Distribute microfiche |
X | |||
Store microfiche output to tapes |
X | |||
ID-Card |
||||
Spool ID-card output to tape or FTP |
X | |||
Ship ID-card tape(s) to services vendor |
X | |||
Receive/verify ID-card output |
X | |||
Distribute ID-card |
X | |||
Store ID card output to tape |
X |
Page 14 of 19
|
Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Financial and Asset Management
Includes responsibilities such as hardware and software acquisition, expense tracking, and inventory necessary to provide financial and asset reporting. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
CLEARPATH |
||||
Hardware and Equipment (in-scope) |
||||
Acquisition Analysis |
P | S | ||
Maintenance Contract Negotiation |
X | |||
Expense Tracking |
P | S | ||
Invoice Processing |
X | |||
Inventory |
X | |||
Acquisition |
P | S | ||
Software |
||||
License Contracting - as specified in Exhibit 3 (dual responsibility) |
X | X | ||
Acquisition Analysis |
P | S | ||
Expense Tracking |
P | S | ||
Invoice Processing |
X | |||
Inventory |
P | S | ||
Acquisition |
P | S | ||
Rate Setting and charge back to UHS for CPU, storage, tape, etc. |
P | S | ||
Provide Job Accounting Statistics and Management Reports |
P | S | ||
Software License Management |
||||
System Software |
X | |||
Service Center Automation Utilities |
X | |||
Business Application |
X | |||
Hardware Management |
||||
Inventory Control (Unisys Service Center) |
X | |||
Acquisitions |
P | S |
Page 15 of 19
|
Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Financial and Asset Management | ||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
MANAGED SERVER FARM (MSF) |
||||
Hardware and Equipment (Unisys owned) |
||||
Acquisition Analysis |
P | S | ||
Maintenance Contract Negotiation |
X | |||
Expense Tracking |
P | S | ||
Invoice Processing |
X | |||
Inventory |
X | |||
Acquisition |
P | S | ||
Hardware and Equipment (UHS owned) |
||||
Acquisition Analysis |
X | |||
Maintenance Contract Negotiation |
X | |||
Expense Tracking |
X | |||
Invoice Processing |
X | |||
Inventory |
X | |||
Acquisition |
X | |||
Software |
||||
License Contracting as specified in Exhibit 3 (dual responsibility) |
X | |||
Acquisition Analysis |
X | |||
Expense Tracking |
X | |||
Invoice Processing |
X | |||
Inventory |
X | |||
Acquisition |
X | |||
Fixed rate charges for MSF support of servers |
P | S | ||
Software License Management |
||||
System Software Unisys owned hardware (AIX only) |
X | |||
System Software |
X | |||
Service Center Automation Utilities |
X | |||
Business Application |
X | |||
Hardware Management |
||||
Inventory Control (Unisys Service Center) |
X | |||
Acquisitions |
X |
Page 16 of 19
|
Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
UNIX Standard Support
Includes responsibilities such as system administration, database administration and operational support necessary to install and maintain UNIX production systems. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
System Administration |
||||
System sizing for ordering using customer information |
X | |||
Request the ordering of new system software or system software upgrades |
X | |||
Order new system software or system software upgrades |
X | |||
Order non-system software or non-system software upgrades |
X | |||
Accountable for charges for all new software or software upgrades |
X | |||
Order systems |
X | |||
Install new hardware |
X | |||
Install operating system software |
X | |||
Install OS patches |
X | |||
Configure OS |
X | |||
Tune OS |
X | |||
Upgrade OS |
X | |||
Install application environment software |
X | |||
Configure application environment software |
X | |||
Tune application environment software |
X | |||
Upgrade environment software |
X | |||
Perform system backups and recoveries (BRU Sysback) |
||||
Port utilities, test and maintain on RS6000 |
X | |||
Install utilities on UHS systems |
S | P | ||
Define backup standards |
S | P | ||
Configure and test backup scripts |
S | P | ||
Execute and monitor backup scripts |
X | |||
Manage system security |
X | |||
Assign IP Addresses and Switch Port Assignments |
X | |||
Local installation of network connectivity (patch cable) |
X | |||
Manage system printers and print queues |
X | |||
System performance monitoring |
X | |||
Development of and Implementation of decommitment procedures for removing UNIX boxes from UHS use (e.g., removing of sensitive files, removing licensed software, etc.). |
X | |||
Database Administration |
||||
Install database software |
X | |||
Configure database software |
X | |||
Tune database software |
X | |||
Upgrade database software |
X | |||
Create databases and database objects |
X | |||
Reorganize databases |
X | |||
Monitor database performance |
X | |||
Monitor database object sizes |
X | |||
Perform database recoveries |
X | |||
Assist developers in planning |
X | |||
Size databases |
X | |||
Tape Management (BRU Sysback) |
||||
Mount Tapes |
X | |||
Out of company Tape processing |
X | |||
Off site storage |
X | |||
Tape library management |
X | |||
Tape initialization |
X | |||
Cleaning of tape drives |
X | |||
ADSM/TSM Backup Support |
||||
Unisys to support ADSM/TSM as described in the Network Backup System Operation SLA |
X |
Page 17 of 19
|
Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
UNIX Standard Support
Includes responsibilities such as system administration, database administration and operational support necessary to install and maintain UNIX production systems. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Hardware Planning, Maintenance and Installation |
||||
Technology in-put, review, and general recommendation |
X | |||
Technology plan review and approval |
X | |||
Hardware facilities requirements |
X | |||
Hardware installations and maintenance |
X | |||
Project planning for hardware upgrades, migrations and new systems |
S | P | ||
Configuration Management |
||||
Provide tracking of Server by Hardware Name and Serial Number |
X | |||
Provide system software inventory reporting |
X | |||
Provide 3rd Party software inventory reporting |
X | |||
Disaster Recovery |
||||
Service Center/Data Network Machine failure |
||||
Service Center equipment |
X | |||
Data network equipment |
X | |||
Scheduling Application |
X | |||
Computer Operations |
||||
System monitoring |
X | |||
System boots based on customer request |
X |
Page 18 of 19
|
Information Technology Services Agreement |
|
||
Exhibit 01 | ||||
Base Services and Function and Scope Matrix | ||||
|
Account Management
Includes responsibilities such as management structure, service level agreements, change control, and problem management necessary to manage the account. |
||||
Responsibility
|
||||
Unisys
|
UHS
|
|||
(X - Responsible, P - Primary, S - Secondary) |
||||
Management Structure |
||||
Account Executive (Unisys) |
X | |||
Account Executive (UHS) |
X | |||
Account Manager (Unisys) |
X | |||
Participation in Executive Steering Committee |
X | X | ||
Reports and Meetings |
||||
Reports (performance) |
P | S | ||
Meetings (agenda & minutes) |
P | S | ||
Service Level Agreement (SLA) Management |
||||
Define service level requirements |
S | P | ||
Define and maintain performance process |
P | S | ||
Document service level agreements and service level objectives |
X | |||
Measure and analyze performance |
X | |||
Implement improvement programs |
P | S | ||
Provide monthly reports |
X | |||
Change Control and Management |
||||
Define and maintain change management process |
X | |||
Participate in UHS change management process |
S | P | ||
Provide change requirements for application software installs and upgrades |
X | |||
Provide Application changes |
X | |||
Provide change requirements for Systems Software |
P | S | ||
Provide back-off procedures for system software changes |
P | S | ||
Conduct change control meeting |
S | P | ||
Escalate change control conflicts |
S | P | ||
Report on change success (to UHS) |
X | |||
Problem Management |
||||
Define and maintain problem management process |
X | |||
Participate in UHS problem management process |
S | P | ||
Record problems |
X | |||
Distribute to support groups for resolution |
X | |||
Track problem through resolution |
P | S | ||
Escalate as required (War room) -(dual responsibility) |
X | X |
Page 19 of 19
|
Information Technology Services Agreement |
|
||
Exhibit 2 | ||||
UHS Application Software | ||||
|
Unix
Production Applications |
AccuTraq(WebSvr) |
ACIS |
Adjudipro |
AppCenter Server |
APT |
Atlas |
AutoSys server - Primary |
DBP |
BRIO |
CARE24 |
Cold project |
Consolidated data server |
CPW |
DB2 Connect |
DNS environment |
eBill |
Eligibility/Provider DB |
EmployerEServices |
ESPH-ESPP |
Everlink /Nextgen |
FileNet |
Health Risk Assesment/HRA |
IBAAG (Internet benefits at a glance) |
Imaging DB Retrevial Sys |
LetGen |
Linx Object Tier |
Medica |
Mercury Letters |
METS-Medicare Encounter Tracking |
MMEN-Medicare Medicade practice |
MQ Series |
NewMedia/Health Forums |
NightVision/Nightingale |
NIS environment |
Openview/NetNodeManager |
Optum |
PARS (UTOA) |
PatientID (PTID) |
PDS |
PeopleSoft |
Physicians portal/myuhc.com |
Plan Performance Improvement/PPI |
Page 1 of 2
|
Information Technology Services Agreement |
|
||
Exhibit 2 | ||||
UHS Application Software | ||||
|
Production Applications |
PRMS |
PROVMAP Object Server |
Qstar |
Resource Maintainer |
SGIA |
Siebel/Rosetta |
SSS |
Sybase Replication Server |
Total View Workgroup Management |
Tracey Object Tier |
Training Department |
UBH-ONLINE |
UBS |
Underwriting |
URN2 |
VETSS |
Vision |
WAND |
WebSphere |
UNISYS ClearPath
Production Applications |
COSMOS |
Jobtrk |
Security DB |
Page 2 of 2
|
Information Technology Services Agreement |
|
||
Exhibit 3 | ||||
System Software | ||||
|
Mainframe System Software
Unisys ClearPath Proprietary Software
(GVPRODC)
Style |
Product |
Rev./Vers. |
License
Holder |
Install
Date |
Last
Change Date |
Term of
License |
||||||
NXS58008-76K |
IOE:NX58XX-76K HMP-80 | HMP 8.0 | Unisys | 8/9/03 | 11/22/03 | 10/31/2005 | ||||||
NXS840-EEX |
IOE:NTE4 1-8 US/CA 25CAL | HMP 8.0 | Unisys | 8/9/03 | 11/22/03 | 10/31/2005 | ||||||
NXS840-EEU |
IOE:NTE4 1-8 US/CA 25CAL | HMP 8.0 | Unisys | 8/9/03 | 11/22/03 | 10/31/2005 | ||||||
PC1-XVE |
WRKST SW:XVISION ECLIPSE | HMP 8.0 | Unisys | 8/9/03 | 11/22/03 | 10/31/2005 | ||||||
PC1-XVE |
WRKST SW:XVISION ECLIPSE | HMP 8.0 | Unisys | 8/9/03 | 11/22/03 | 10/31/2005 | ||||||
NXP110-CSS |
COM SW:NX SERIES BNAV2 | HMP 7.0 | Unisys | 4/26/03 | 9/20/03 | 10/31/2005 | ||||||
NXP110-DB1 |
DATAMGT:DBATOOLS-ANALY | HMP 8.0 | Unisys | 11/15/03 | 11/15/03 | 10/31/2005 | ||||||
NXP110-DMT |
DATAMGT:DMSII DM INTRPTR | HMP 8.0 | Unisys | 11/15/03 | 11/15/03 | 10/31/2005 | ||||||
NXP110-DDM |
DATAMGT:DMSII MONITOR | HMP 8.0 | Unisys | 11/15/03 | 11/15/03 | 10/31/2005 | ||||||
NXP110-ERG |
DATAMGT:ERGO | HMP 8.0 | Unisys | 11/15/03 | 11/15/03 | 10/31/2005 | ||||||
NXP110-HSV |
COM SW:HOST SERVICES | HMP 7.0 | Unisys | 4/26/03 | 9/20/03 | 10/31/2005 | ||||||
NXP110-DAC |
SEC SW:INFOGUARD ACC | HMP 8.0 | Unisys | 8/9/03 | 11/22/03 | 10/31/2005 | ||||||
NXP110-SSL |
SEC SW:SEC SUPPORT LIBRY | HMP 8.0 | Unisys | 8/9/03 | 11/22/03 | 10/31/2005 | ||||||
NXP110-MAC |
O/S:MACS SW FOR 5 DISKS | HMP 8.0 | Unisys | 8/9/03 | 11/22/03 | 10/31/2005 | ||||||
NXU5800-76K |
SUBSCRN:SSU NX58XX-76 | HMP 8.0 | Unisys | 8/9/03 | 11/22/03 | 10/31/2005 | ||||||
NXU110-DB1 |
SUBSCRN:DBATOOLS | HMP 8.0 | Unisys | 8/9/03 | 11/22/03 | 10/31/2005 |
Unisys ClearPath Proprietary Software
(UHSPRODD)
Style |
Product |
Rev./Vers.
|
License
Holder |
Install
Date |
Last
Change Date |
Term of
License |
||||||
NXS58008-74K |
IOE:NX58XX-74K HMP-80 | HMP 8.0 | Unisys | 9/13/03 | 2/14/04 | 10/31/2005 | ||||||
NXS840-EEX |
IOE:NTE4 1-8 US/CA 25CAL | HMP 8.0 | Unisys | 9/13/03 | 2/14/04 | 10/31/2005 | ||||||
NXS840-EEU |
IOE:NTE4 1-8 US/CA 25CAL | HMP 8.0 | Unisys | 9/13/03 | 2/14/04 | 10/31/2005 | ||||||
PC1-XVE |
WRKST SW:XVISION ECLIPSE | HMP 8.0 | Unisys | 9/13/03 | 2/14/04 | 10/31/2005 | ||||||
PC1-XVE |
WRKST SW:XVISION ECLIPSE | HMP 8.0 | Unisys | 9/13/03 | 2/14/04 | 10/31/2005 | ||||||
NXP110-CSS |
COM SW:NX SERIES BNAV2 | HMP 7.0 | Unisys | 7/12/03 | 10/11/03 | 10/31/2005 | ||||||
NXP110-DB1 |
DATAMGT:DBATOOLS-ANALY | HMP 8.0 | Unisys | 10/25/03 | 10/25/03 | 10/31/2005 | ||||||
NXP110-DMT |
DATAMGT:DMSII DM INTRPTR | HMP 8.0 | Unisys | 10/25/03 | 10/25/03 | 10/31/2005 | ||||||
NXP110-DDM |
DATAMGT:DMSII MONITOR | HMP 8.0 | Unisys | 10/25/03 | 10/25/03 | 10/31/2005 | ||||||
NXP110-ERG |
DATAMGT:ERGO | HMP 8.0 | Unisys | 10/25/03 | 10/25/03 | 10/31/2005 | ||||||
NXP110-HSV |
COM SW:HOST SERVICES | HMP 7.0 | Unisys | 7/12/03 | 10/11/03 | 10/31/2005 | ||||||
NXP110-DAC |
SEC SW:INFOGUARD ACC | HMP 8.0 | Unisys | 9/13/03 | 2/14/04 | 10/31/2005 | ||||||
NXP110-SSL |
SEC SW:SEC SUPPORT LIBRY | HMP 8.0 | Unisys | 9/13/03 | 2/14/04 | 10/31/2005 | ||||||
NXP110-MAC |
O/S:MACS SW FOR 5 DISKS | HMP 8.0 | Unisys | 9/13/03 | 2/14/04 | 10/31/2005 | ||||||
NXU5800-74K |
SUBSCRN:SSU NX58XX-74 | HMP 8.0 | Unisys | 9/13/03 | 2/14/04 | 10/31/2005 | ||||||
NXU110-DB1 |
SUBSCRN:DBATOOLS | HMP 8.0 | Unisys | 9/13/03 | 2/14/04 | 10/31/2005 |
Page 1 of 6
|
Information Technology Services Agreement |
|
||
Exhibit 3 | ||||
System Software | ||||
|
Unisys ClearPath Proprietary Software
(MNA17A)
Style |
Product |
Rev./Vers.
|
License
Holder |
Install
Date |
Last
Change Date |
Term of
License |
||||||
NXS68008-A4 |
IOE:NX6824-PLA MCP8 | HMP 8.0 | Unisys | 9/13/03 | 11/22/03 | 10/31/2005 | ||||||
NXS840-EEX |
IOE:NTE4 1-8 US/CA 25CAL | HMP 8.0 | Unisys | 9/13/03 | 11/22/03 | 10/31/2005 | ||||||
NXS840-EEU |
IOE:NTE4 1-8 US/CA 25CAL | HMP 8.0 | Unisys | 9/13/03 | 11/22/03 | 10/31/2005 | ||||||
PC1-XVE |
WRKST SW:XVISION ECLIPSE | HMP 8.0 | Unisys | 9/13/03 | 11/22/03 | 10/31/2005 | ||||||
PC1-XVE |
WRKST SW:XVISION ECLIPSE | HMP 8.0 | Unisys | 9/13/03 | 11/22/03 | 10/31/2005 | ||||||
NXP130-CSS |
COM SW:NX SERIES BNAV2 | HMP 7.0 | Unisys | 5/24/03 | 9/26/03 | 10/31/2005 | ||||||
NXP130-DB1 |
DATAMGT:DBATOOLS-ANALY | HMP 8.0 | Unisys | 11/15/03 | 11/15/03 | 10/31/2005 | ||||||
NXP130-DMT |
DATAMGT:DMSII DM INTRPTR | HMP 8.0 | Unisys | 11/15/03 | 11/15/03 | 10/31/2005 | ||||||
NXP130-DDM |
DATAMGT:DMSII MONITOR | HMP 8.0 | Unisys | 11/15/03 | 11/15/03 | 10/31/2005 | ||||||
NXP130-ERG |
DATAMGT:ERGO | HMP 8.0 | Unisys | 11/15/03 | 11/15/03 | 10/31/2005 | ||||||
NXP130-HSV |
COM SW:HOST SERVICES | HMP 7.0 | Unisys | 5/24/03 | 9/26/03 | 10/31/2005 | ||||||
NXP130-DAC |
SEC SW:INFOGUARD ACC | HMP 8.0 | Unisys | 9/13/03 | 11/22/03 | 10/31/2005 | ||||||
NXP130-SSL |
SEC SW:SEC SUPPORT LIBRY | HMP 8.0 | Unisys | 9/13/03 | 11/22/03 | 10/31/2005 | ||||||
NXU6800-A4 |
SUBSCRN:SSU NX6824-PL8 | HMP 8.0 | Unisys | 9/13/03 | 11/22/03 | 10/31/2005 | ||||||
NXU130-DB1 |
SUBSCRN:DBATOOLS | HMP 8.0 | Unisys | 9/13/03 | 11/22/03 | 10/31/2005 |
Unisys ClearPath Proprietary Software
(UHSPRODE)
Style |
Product |
Rev./Vers.
|
License
Holder |
Install
Date |
Last
Change Date |
Term of
License |
||||||
CSL7821-D13 |
IMAGE ENABLER 2 DOM PL3 | HMP 8.0 | Unisys | 8/9/03 | 11/8/03 | 10/31/2005 | ||||||
GTS204-SSA |
UIS OS ENVIRONMENTSSA(9X5 | HMP 8.0 | Unisys | 8/9/03 | 11/8/03 | 10/31/2005 | ||||||
GTS200-ADD |
MULTIPLE SYSTEMS FEE | HMP 8.0 | Unisys | 8/9/03 | 11/8/03 | 10/31/2005 | ||||||
CSS78018-192 |
IOE CS7801 960/23328 MCP | HMP 8.0 | Unisys | 8/9/03 | 11/8/03 | 10/31/2005 | ||||||
CSS7801-CD1 |
IOE COMPANION PKG DC | HMP 8.0 | Unisys | 8/9/03 | 11/8/03 | 10/31/2005 | ||||||
CSP10130-CSS |
COM SW:NX SERIES BNAV2 | HMP 7.0 | Unisys | 9/20/03 | 9/20/03 | 10/31/2005 | ||||||
CSP10130-HSV |
COM SW:HOST SERVICES | HMP 7.0 | Unisys | 9/20/03 | 9/20/03 | 10/31/2005 | ||||||
CSP10130-DMT |
DATAMGT:DMSII DM INTRPTR | HMP 8.0 | Unisys | 11/15/03 | 11/15/03 | 10/31/2005 | ||||||
CSP10130-DDM |
DATAMGT:DMSII MONITOR | HMP 8.0 | Unisys | 11/15/03 | 11/15/03 | 10/31/2005 | ||||||
CSP10130-ERG |
DATAMGT:ERGO | HMP 8.0 | Unisys | 11/15/03 | 11/15/03 | 10/31/2005 | ||||||
CSP10130-DAC |
SEC SW:INFOGUARD ACC | HMP 8.0 | Unisys | 8/9/03 | 11/8/03 | 10/31/2005 | ||||||
CSP10130-DB1 |
DATAMGT:DBATOOLS ANALY | HMP 8.0 | Unisys | 11/15/03 | 11/15/03 | 10/31/2005 | ||||||
CSP10130-SSL |
SEC SW:SEC SUPPORT LIBRY | HMP 8.0 | Unisys | 8/9/03 | 11/8/03 | 10/31/2005 | ||||||
CSU7801-192 |
SSUSCRN CS7801 960/23328 | HMP 8.0 | Unisys | 8/9/03 | 11/8/03 | 10/31/2005 | ||||||
CSU10130-DB1 |
SUBSCRN:DBATOOLS | HMP 8.0 | Unisys | 8/9/03 | 11/8/03 | 10/31/2005 |
Page 2 of 6
|
Information Technology Services Agreement |
|
||
Exhibit 3 | ||||
System Software | ||||
|
Unisys ClearPath Proprietary Software
(DEVELOPMENT and TEST)
Style |
Product |
Rev./Vers.
|
License
Holder |
Install
Date |
Last
Change Date |
Term of
License |
||||||
NX58007-62K |
IOE NX58XX-62K MCP | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NX58007-52K |
IOE NX58XX-52K MCP | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXP90-CSS |
COM SW:NX SERIES BNAV2 | HMP 7.0 | Unisys | 9/05/02 | 8/5/03 | 10/31/2005 | ||||||
NXP90-CSS |
COM SW:NX SERIES BNAV2 | HMP 7.0 | Unisys | 9/05/02 | 8/5/03 | 10/31/2005 | ||||||
NXP90-DB1 |
DATAMGT:DBATOOLSANALY | HMP 8.0 | Unisys | 9/15/03 | 3/3/04 | 10/31/2005 | ||||||
NXP90-DB1 |
DATAMGT:DBATOOLSANALY | HMP 8.0 | Unisys | 9/15/03 | 3/3/04 | 10/31/2005 | ||||||
NXP90-DMT |
DATAMGT:DMSII DM INTRPTR | HMP 8.0 | Unisys | 9/15/03 | 3/3/04 | 10/31/2005 | ||||||
NXP90-DMT |
DATAMGT:DMSII DM INTRPTR | HMP 8.0 | Unisys | 9/15/03 | 3/3/04 | 10/31/2005 | ||||||
NXP90-DDM |
DATAMGT:DMSII MONITOR | HMP 8.0 | Unisys | 9/15/03 | 3/3/04 | 10/31/2005 | ||||||
NXP90-DDM |
DATAMGT:DMSII MONITOR | HMP 8.0 | Unisys | 9/15/03 | 3/3/04 | 10/31/2005 | ||||||
NXP90-ERG |
DATAMGT:ERGO | HMP 8.0 | Unisys | 9/15/03 | 3/3/04 | 10/31/2005 | ||||||
NXP90-ERG |
DATAMGT:ERGO | HMP 8.0 | Unisys | 9/15/03 | 3/3/04 | 10/31/2005 | ||||||
NXP90-HSV |
COM SW:HOST SERVICES | HMP 7.0 | Unisys | 9/05/02 | 8/5/03 | 10/31/2005 | ||||||
NXP90-HSV |
COM SW:HOST SERVICES | HMP 7.0 | Unisys | 9/05/02 | 8/5/03 | 10/31/2005 | ||||||
NXP90-DAC |
SEC SW:INFOGUARD ACC | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXP90-DAC |
SEC SW:INFOGUARD ACC | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXP90-SSL |
SEC SW:SEC SUPPORT LIBRY | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXP90-SSL |
SEC SW:SEC SUPPORT LIBRY | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXP90-C74 |
CMPLR:COBOL ANSI 74 | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXP90-C74 |
CMPLR:COBOL ANSI 74 | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXP90-CTD |
DEV AID:COBOL 74 TST/DBG | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXP90-CTD |
DEV AID:COBOL 74 TST/DBG | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXU5800-62 |
SUBSCRN:SSU NX5822-62 | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXU5800-52 |
SUBSCRN:SSU NX5822-52 | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXP90-C85 |
CMPLR:COBOL 85 | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXP90-C85 |
CMPLR:COBOL 85 | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXV90-DB1 |
SUBSCRN:OBA TOOLS | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 | ||||||
NXV90-DB1 |
SUBSCRN:OBA TOOLS | HMP 8.0 | Unisys | 7/7/03 | 2/7/04 | 10/31/2005 |
Page 3 of 6
|
Information Technology Services Agreement |
|
||
Exhibit 3 | ||||
System Software | ||||
|
|
|
UHS ClearPath 3rd Party Software
Style |
Product |
Rev./Vers. |
License
|
Last
|
Term of
|
|||||
B&L ASSOCIATES |
BLPACK | PROG COMPATIBILITY:05/17/03 RELEASEID=04/18/03 | UHS | 9/9/03 | 10/31/2005 | |||||
B&L ASSOCIATES |
BLLIB | PROG COMPATIBILITY:09/25/02 (Database : Rev 5 ) | UHS | 7/24/03 | 10/31/2005 | |||||
BLLABEL | PROG COMPATIBILITY:09/25/02 (REV 5) | UHS | 7/24/03 | 10/31/2005 | ||||||
B&L ASSOCIATES |
BL/DIST | REV31 01/23/02 | UHS | 3/10/04 | 10/31/2005 | |||||
B&L ASSOCIATES |
BLSCHED | 04/25/2003 @ 00:12:56 | UHS | 4/22/03 | 10/31/2005 | |||||
Sightline Systems |
VIEWPOINT | 52.03 | UHS | 12/5/01 | Perpetual | |||||
ATTACHMATE |
DATABRIDGE | 4.1 | UHS | 3/20/03 | Perpetual | |||||
Cypress |
SPOOL DTEC FLIST FDUMP LPD PRINTING |
9.0.138 9.0.138 2.3 2.3 9.0.138 |
UHS |
9/17/03 9/17/03 1/27/04 1/27/04 9/17/03 |
05/31/2004 | |||||
OPENWARE |
XGEN XGEN RUNTIME |
2.8.032 2.8.032 |
UHS | 7/24/03 | 12/31/04 | |||||
STAHURA-BRENNER |
PrinT Trail | 1.012.0055 | UHS | 05/07/03 | Perpetual |
Unisys ClearPath 3rd Party Software
Style |
Product |
Rev./Vers. |
License
Holder |
Last
Change Date |
Term of
License |
|||||
STAHURA- BRENNER |
CCF | 435B | Unisys | 11/22/03 | Perpetual |
Page 4 of 6
|
Information Technology Services Agreement |
|
||
Exhibit 3 | ||||
System Software | ||||
|
Unisys ClearPath Libra Proprietary Software
(DEVELOPMENT, TEST & DR in Salt Lake)
Style |
Product |
Rev./Vers.
|
License
Holder |
Install
Date |
Last
Change Date |
Term of
License |
||||||
CSL101851-8 |
Image Enabler 1 Dom 40/972 | HMP 8.0 | Unisys | 03/31/2006 | ||||||||
CSL101851-8 |
Image Enabler 1 Dom 40/972 | HMP 8.0 | Unisys | 03/31/2006 | ||||||||
CSS10185-CD1 |
IOE Companion Pkg - DD | HMP 8.0 | Unisys | 03/31/2006 | ||||||||
CS10-END |
IOE Encryption Opt US | HMP 8.0 | Unisys | 03/31/2006 | ||||||||
ECH10-CH |
Call Home Service CS MCP | HMP 8.0 | Unisys | 03/31/2006 | ||||||||
SDK101808-39 |
SDK Libra 180 195/4739 MCP8 | HMP 8.0 | Unisys | 03/31/2006 | ||||||||
SDU10180-39 |
SSUScrn SDK Libra 180 195/4739 | HMP 8.0 | Unisys | 03/31/2005 | ||||||||
SDK101808-29 |
SDK Libra 180 145/3524 MCP8 | HMP 8.0 | Unisys | 03/31/2006 | ||||||||
SDU10180-29 |
SSUScrn SDK Libra 180 145/3524 | HMP 8.0 | Unisys | 03/31/2005 | ||||||||
SDL101851-29 |
SDK Enabler 1 Dom 145/3524 | HMP 8.0 | Unisys | 03/31/2006 | ||||||||
SDL101851-39 |
SDK Enabler 1 Dom 195/4739 | HMP 8.0 | Unisys | 03/31/2006 | ||||||||
CERxxx |
Disaster Recovery ALC 40 - 725 | HMP 8.0 | Unisys | 03/31/2005 | ||||||||
CERxxx |
Disaster Recovery ALC 40 - 725 | HMP 8.0 | Unisys | 03/31/2005 | ||||||||
CERxxx |
Disaster Recovery ALC 145 - 725 | HMP 8.0 | Unisys | 03/31/2005 |
Page 5 of 6
|
Information Technology Services Agreement |
|
||
Exhibit 3 | ||||
System Software | ||||
|
Non-Mainframe System Software
UNIX 3 rd Party Software
Style |
Product |
Rev./Vers.
|
License Holder
|
Last
Change Date |
Term of
License |
|||||
5771-SUB |
AIX Software Subscription/Version Protection |
Holder determined by
hardware owner. See Exhibit 6. |
N/A | Perpetual | ||||||
TSM Client |
TSM agents |
4.2, 4.3, 5.1, 5.2, 5.8,
B11.11 |
Covered under
separate ASRs. |
N/A | Perpetual |
Page 6 of 6
|
Information Technology Services Agreement |
|
||
Exhibit 4 | ||||
Transition/Migration Plan | ||||
|
2004 Contract Exhibit Note
This exhibit was considered to be part of the initial COSMOS transition of services to Unisys, and has been intentionally deleted by both parties for the contract extension.
Page 1 of 1
|
Information Technology Services Agreement |
|
||
Exhibit 4A | ||||
Transition/Migration Project Plan | ||||
|
2004 Contract Exhibit Note
This exhibit was considered to be part of the initial COSMOS transition of services to Unisys, and has been intentionally deleted by both parties for the contract extension.
Page 1 of 1
|
Information Technology Services Agreement |
|
||
Exhibit 5 | ||||
Performance Credits | ||||
|
2004 Contract Exhibit Note
This exhibit was considered to be part of the initial COSMOS transition of services to Unisys, and has been intentionally deleted by both parties for the contract extension.
Page 1 of 1
Information Technology Services Agreement | ||||
Exhibit 6 | ||||
Machines |
platform |
name |
alias |
location |
style |
serialnumber |
owner |
description |
|||||||
Eagan Service Center Mainframe Hardware | ||||||||||||||
A Series |
UHA1 | UHSTEST1 | 3G05C07 | NX5822-52 | 491215489 | Unisys | UHG Test1 | |||||||
A Series |
UHA2 | UHSTEST2 | 3G04F15 | A11-422 | 408717890 | Unisys | N/A - not in use | |||||||
A Series |
UHAA | MNA17A | 3G06C10 | NX6824-PL10 | 491361531 | Unisys | DRGBL, DRDELTA, DRHALO, DRARCDELTADB, DRARCHALODB | |||||||
A Series |
UHAB | MNA17B | 3G05F07 | NX5822-53 | 491215356 | Unisys | UHS test and development mainframe | |||||||
A Series |
UHAC | GVPRODC | 3F05L07 | NX5822-76K | 491212247 | Unisys | DRMICA, DRARCMICADB | |||||||
A Series |
UHAD | UHSPRODD | 3G05L16 | NX5822-74 | 490996162 | Unisys | DRECHO, DRJAVA | |||||||
A Series |
UHAE | UHSPRODE | 3G05D12 | CS7801000-D1 | 5114422543 | Unisys | DRFOX, DRARFOXDB | |||||||
A Series |
UHAF | UHSPRODF | 3G05L10 | NX4802-76 | 490888187 | Unisys | DRALPHA, DRCHARLIE, DRARCALPHADB - not in use | |||||||
A Series |
UHAG | UHSPRODG | 3F05L13 | NX4802-76 | 490959855 | Unisys | DRBRAVO, DRGAMMA, DRLIMA, DRARCBRAVODB, DRARCGAMMADB - not in use | |||||||
CNA1 |
CNA1 | 8001 | MNA17A | Unisys | MNA17A ClearPath Network Appliance | |||||||||
CNA1 |
CNA2 | 8002 | MNA17A | Unisys | MNA17A ClearPath Network Appliance | |||||||||
CNA1 |
CNA3 | 8003 | MNA17A | Unisys | MNA17A ClearPath Network Appliance | |||||||||
CNA1 |
CNA4 | 8004 | MNA17A | Unisys | MNA17A ClearPath Network Appliance | |||||||||
CNAC |
CNA1 | 8001 | UHSPRODE | Unisys | UHSPRODE ClearPath Network Appliance | |||||||||
CNAC |
CNA2 | 8002 | UHSPRODE | Unisys | UHSPRODE ClearPath Network Appliance | |||||||||
CNAC |
CNA3 | 8003 | UHSPRODE | Unisys | UHSPRODE ClearPath Network Appliance | |||||||||
CNAC |
CNA4 | 8004 | UHSPRODE | Unisys | UHSPRODE ClearPath Network Appliance | |||||||||
Disk Complex |
EMC02 | 3G06M09 | EMC 5430 | HK182501552 | Unisys | UHG Prod F | ||||||||
Disk Complex |
EMC05 | 3G05M05 | EMC 5430 | HK182500392 | Unisys | UHG Prod C | ||||||||
Disk Complex |
EMC06 | 3G07M01 | EMC 5700 | HK182400741 | Unisys | UHG | ||||||||
Disk Complex |
EMC11 | 3G06G11 | EMC 5430 | HK182503623 | Unisys | UHG Prod D/Prod G | ||||||||
Disk Complex |
EMC42 | 3G06M07 | EMC 3830 | HK183502591 | Unisys | UHG MNA17A & Prod G | ||||||||
Disk Complex |
EMC56 | 3G06M05 | EMC 8430 | HK184502577 | Unisys | UHG Prod E | ||||||||
Disk Complex |
EMC61 | 3G05G10 | EMC 3430 | HK182504243 | Unisys | UHG MNA17B, UHS test 1 | ||||||||
Tape Complex |
TC-115 | 3F05G12 | STK 9310 | 004011947 | Unisys | UHG Silo | ||||||||
Tape Complex |
TC-124 | 3F06F03 | STK 9310 | 004011946 | Unisys | UHG Silo |
Page 1 of 4
Information Technology Services Agreement | ||||
Exhibit 6 | ||||
Machines |
Salt Lake City Service Center Mainframe Hardware
|
||||||||
A Series |
SLC | CS780121-D08 | Unisys | SYS:Dual Partition, Dual Domain, 8x | ||||
Disk Complex |
SLC | DMX1000 | Unisys | DMX HIGH PERF SBAY | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
Tape Drive |
SLC | STK9840 | Unisys | StorageTek Tape Standalone Drive | ||||
CNA |
SLC | CNA78185-GEC | Unisys | ClearPath Network Appliance | ||||
CNA |
SLC | CNA78185-GEC | Unisys | ClearPath Network Appliance | ||||
CNA |
SLC | CNA78185-GEC | Unisys | ClearPath Network Appliance | ||||
CNA |
SLC | CNA78185-GEC | Unisys | ClearPath Network Appliance | ||||
CNA |
SLC | CNA78185-GEC | Unisys | ClearPath Network Appliance | ||||
CNA |
SLC | CNA78185-GEC | Unisys | ClearPath Network Appliance | ||||
CNA |
SLC | CNA78185-GEC | Unisys | ClearPath Network Appliance | ||||
CNA |
SLC | CNA78185-GEC | Unisys | ClearPath Network Appliance | ||||
CNA |
SLC | CNA78185-GEC | Unisys | ClearPath Network Appliance | ||||
CNA |
SLC | CNA78185-GEC | Unisys | ClearPath Network Appliance | ||||
CNA |
SLC | CNA78185-FE | Unisys | ClearPath Network Appliance | ||||
CNA |
SLC | CNA78185-FE | Unisys | ClearPath Network Appliance |
Page 2 of 4
Information Technology Services Agreement | ||||
Exhibit 6 | ||||
Machines |
Eagan Service Center Non-Mainframe Hardware | ||||||||||||||
Disk Complex |
EMC55 | 2D08G10 | EMC 8730 | HK184700748 | UHG | UHG Corp Peoplesoft | ||||||||
Disk Complex |
EMC57 | 2D09J08 | FC4700 | SF20004900194 | UHG | UHG SEIBEL | ||||||||
Disk Complex |
EMC70 | 2D09F09 | EMC FC4700 | SF60004600680 | UHG | UHG Clariion FC4700 | ||||||||
Disk Complex |
EMC74 | 2D10M02 | EMC CX600 | FLZ0261000670 | UHG | UHG EMC Disk | ||||||||
Disk Complex |
DC-128 | UHG Jukebox | ||||||||||||
Disk Complex |
DC-129 | UHG Jukebox | ||||||||||||
Disk Complex |
DC-130 | UHG NetApp Filer 5 & 6 | ||||||||||||
Unix |
UH001 | 2B08L06 | IBM RS/6000 | MS70132652250 | Unisys | PeopleSoft - AP, GL, PO SN123 **DECOMMISSIONED | ||||||||
Unix |
UH002 | viper | 2B08I10 | IBM RS/6000 | 26-56294 | Unisys | AdjudiPro (DSvr) **DECOMMISSIONED | |||||||
Unix |
UH003 | tomcat | 2B08I15 | IBM 7013 | 26-56295 | Unisys | AdjudiPro (FSvr) DECOMMISSIONED 1/28/04 | |||||||
Unix |
UH004 | bhfunc6 | 2C08F11 | IBM 7013 | 26-56108 | Unisys | UBS (DSvr)-CMM **DECOMMISSIONED | |||||||
Unix |
UH009 | bhfunc5 | 2C08F10 | IBM 7013 | 26-53569 | Unisys | UBS (DSvr)-STEPS **DECOMMISSIONED | |||||||
Unix |
UH010 | bhdata5 | 2C08F06 | IBM RS/6000 | S70132639064 | Unisys | Rep Server **DECOMMISSIONED | |||||||
Unix |
UH014 | cerebus | 2B08I09 | IBM 7012 | 26-87935 | Unisys | FILENET | |||||||
Unix |
UH015 | cetus | 2B08L13 | IBM 7013 | 26-53744 | Unisys | CPW (DSvr/FSvr) | |||||||
Unix |
UH019 | kazoo | 2C08F12 | IBM RS/6000 | MS70132646969 | Unisys | ACE, ALI, BEN, CL, CT, EC, HP, LM, PCR, PI, QAC, RTS, SCS, SIU, WEL **DECOMMISSIONED | |||||||
Unix |
UH021 | POSEIDON | 2B08I13 | IBM RS/6000 | MS70132653583 | Unisys | EmployerLink Dev **DECOMMISSIONED | |||||||
Unix |
UH022 | orion | 2B08L09 | IBM 7013 | 26-50200 | Unisys | LetGen, CPW | |||||||
Unix |
UH024 | pegasus | 2B08P07 | IBM 7013 | 26-50254 | Unisys | FileNet | |||||||
Unix |
UH026 | polaris | 2B08I06 | IBM 7013 | 26-50490 | Unisys | Employerlink Dev, Qstar Dev | |||||||
Unix |
UH029 | lloyd | 2C08J16 | IBM 7015 | 26-21781 | Unisys | Underwriting | |||||||
Unix |
UH030 | starfish | 2D08C10 | IBM 7026 | 26-1001634 | Unisys | Allina/UBH | |||||||
Unix |
UH039 | 2B08P14 | IBM RS/6000 | MS70152619277 | Unisys | Help Desk Support System **DECOMMISSIONED | ||||||||
Unix |
UH040 | bhdata6 | 2C08M12 | Sun 3500 | 921H2BF2 | Unisys | SyBase (DSvr) **DECOMMISSIONED | |||||||
Unix |
UH041 | bis4 | 2B08L11 | IBM 7013 | 26-58022 | Unisys | PRMS, SSS | |||||||
Unix |
UH042 | bis5 | 2B08L10 | IBM 7013 | 26-57383 | Unisys | Sales Development | |||||||
Unix |
UH049 | hydra | 2C08J09 | IBM 7015 | 26-23321 | Unisys | CPW HA (DSvr/FSvr) | |||||||
Unix |
UH050 | Tempest | 2C08J08 | IBM 7015 | 26-23198 | Unisys | Qstar/CPW Development Server | |||||||
Unix |
UH051 | frog | 2C08J07 | IBM 7015 | 26-23863 | Unisys | eHealth-Internet Services | |||||||
Unix |
UH052 | bhfunc2 | 2C08F07 | IBM 7025 | 25-1012698 | Unisys | UBS (FSvr)-IntegIntake **DECOMMISSIONED | |||||||
Unix |
UH053 | bhfunc1 | 2C08F07 | IBM 7025 | 25-1012697 | Unisys | UBS (FSvr)-IRIS, UBS (FSvr)-PROVNET **DECOMMISSIONED | |||||||
Unix |
UH054 | medusa | 2C08M08 | IBM 7015 | 26-24236 | Unisys | Letgen, Letgen Archive | |||||||
Unix |
UH058 | sybil | 2C08M06 | IBM 7015 | 1029840 | Unisys | Evercare/PDS, ISP, URN2 | |||||||
Unix |
UH061 | gemini | 2D08C10 | IBM 7026 | 26-1001482 | Unisys | Qstar(FSvr) | |||||||
Unix |
UH062 | scorpio | 2C08F13 | IBM 7013 | 26-53745 | Unisys | Qstar-Dev | |||||||
Unix |
UH063 | aries | 2D08C11 | IBM 7026 | 26-1002855 | Unisys | BRIO | |||||||
Unix |
UH064 | taurus | 2D08C11 | IBM 7013 | 26-1002899 | Unisys | APT(FSvr), SGIA (FSvr), SSS(FSvr) | |||||||
Unix |
UH065 | leo | 2C08J10 | IBM 7026-H50 | 10-02900 | Unisys | PRMS (DSvr/FSvr) | |||||||
Unix |
UH066 | euro | 2D08G07 | IBM 7017 | 1092010 | Unisys | PeopleSoft-FIN DECOMMISSIONED 1/7/04 | |||||||
Unix |
UH070 | saber | 2D08J06 | IBM 7026 | 26-1003018 | UHG | ClaimCheck (FSvr) DECOMMISSIONED 2/23/04 | |||||||
Unix |
UH071 | griffin | 2D08J06 | IBM 7026 | 26-1003710 | Unisys | AdjudiPro DECOMMISSIONED 2/23/04 | |||||||
Unix |
UH072 | triton | 2C08C06 | IBM 7025 | S7025104969 | Unisys | EmployerLink | |||||||
Unix |
UH074 | irds2 | 2D08J14 | IBM 7026-6H1 | 10-D613A | Unisys | IBM Server | |||||||
Unix |
UH075 | peso1 | 2D09F05 | IBM 7017 | 10-C670D | Unisys | HR | |||||||
Unix |
UH076 | peso2 | 2D08M09 | IBM 7017 | 1092924 | Unisys | Future SPO Server DECOMMISSIONED 1/7/04 | |||||||
Unix |
UH077 | bhfunc0 | 2C08C07 | IBM 7013 | 26-55673 | Unisys | UBH Backup/Dev | |||||||
Unix |
UH080 | eeyore | 2D08M12 | IBM 7025 | 1092929 | Unisys | MQ | |||||||
Unix |
UH081 | idamay | 2B08L15 | IBM RS/6000 | MS70251038327 | Unisys | Medicare/HMO-6S, Medicare/HMO-Ernest, Medicare/HMO-MAP | |||||||
Unix |
UH083 | lightning | 2D08M15 | IBM 7017 | 1094655 | Unisys | Eligibility/Provider, NewMedia/Health, Forums, OIF, DB, OPTUM-Nightingale, OPTUM, CARE24, Reporting, Vision, PatientID(PTID) | |||||||
Unix |
UH084 | thunder | 2D08J16 | IBM 7015 | 26-20920 | Unisys | OPTUM dev./test | |||||||
Unix |
UH085 | phantom | 2D09M01 | IBM 7017 | 1094470 | Unisys | AdjudiPro | |||||||
Unix |
UH086 | libra | 2D09M03 | IBM RS/6000 | 1095253 | Unisys | QSTAR | |||||||
Unix |
UH087 | pisces | 2D08C10 | IBM 7026 | 26-1012264 | Unisys | QSTAR | |||||||
Unix |
UH088 | magic | 2B08L07 | IBM 7025 | 25-1042244 | Unisys | see kazoo - Allina Dev. | |||||||
Unix |
UH089 | mercury | 2C08F15 | IBM 7025 | 1042634 | Unisys | Letgen | |||||||
Unix |
UH090 | salt | 2C08C06 | IBM 7025-F80 | 1041063 | Unisys | DDCS Gateway (decommissioned) | |||||||
Unix |
UH091 | pepper | 2C08F09 | IBM 7025 | 1043224 | Unisys | DDCS Gateway | |||||||
Unix |
UH095 | dorothy | 2B08P11 | IBM 7026 | 10-D1B3D | Unisys | MyUHC | |||||||
Unix |
UH096 | toto | 2B08P11 | IBM 7026 | 10-D1B4D | Unisys | MyUHC | |||||||
Unix |
UH101 | myth | 2D08C14 | IBM 7026 | 10-F23AD | Unisys | Alina Micro-Ops | |||||||
Unix |
UH103 | groucho | 2D08C12 | IBM 7025 | 10-CF2AD | Unisys | PRMS | |||||||
Unix |
UH104 | nimbus | 2B08P10 | IBM 7026 | 10-0210F | UHG | Resource Maintainer | |||||||
Unix |
UH105 | spock | 2B08P15 | IBM 7026 | 10-0B95F | Unisys | Employer Link | |||||||
Unix |
UH106 | kirk | 2B08P15 | IBM 7026 | 10-0B9CF | Unisys | Employer Link | |||||||
Unix |
UH107 | bass | 2C08C16 | IBM 7026-H70 | 10-F272D | Unisys | Consolidated Data Server | |||||||
Unix |
UH108 | virgo | 2C08F16 | IBM 7026 | 10-0019F | Unisys | APT-Sales | |||||||
Unix |
UH109 | astro | 2C08J16 | IBM 7026-H80 | 10-21194 | UHG | Evercare/PDS | |||||||
Unix |
UH112 | bhobj5 | 2C08M14 | Sun Netra 1405 | 045M2036 | UHG | Object Server | |||||||
Unix |
UH118 | krona | 2D08G12 | IBM 7017 | 10-BF32D | UHG | PeopleSoft - FIN | |||||||
Unix |
UH120 | harry | 2D09M08 | IBM RS/6000 | 10-8306F | Unisys | ESPP | |||||||
Unix |
UH121 | lira | 2D08G08 | IBM RS/6000 | S7026105BFDF | UHG | Finance **DECOMMISSIONED | |||||||
Unix |
UH122 | franc | 2D08G08 | IBM RS/6000 | 10-5BD5F | UHG | HR DECOMMISSIONED 1-7-04 | |||||||
Unix |
UH123 | maki | 2D08G14 | IBM 7026 | 10-213BF | UHG | E-Bill/IB | |||||||
Unix |
UH124 | unagi | 2D08G14 | IBM 7026 | 10-2147F | UHG | E-Bill/IB | |||||||
Unix |
UH125 | wasabi | 2D09J03 | IBM 7026-6M1 | 10-418AF | UHG | E-Bill/IB | |||||||
Unix |
UH126 | SAKE | 2D09J04 | IBM 7026-6M1 | 10-424CF | UHG | E-Bill/IB | |||||||
Unix |
UH127 | BIKINI | 2D09J03 | IBM 7026 | 10-51F0F | UHG | E-Bill/Data Mart | |||||||
Unix |
UH128 | speedo | 2D09F02 | IBM 7026 | 10-51D4F | UHG | E-Bill/Data Mart | |||||||
Unix |
UH129 | hamlet | 2D09M12 | IBM 7017 | 10-C4A9D | Unisys | CPW |
Page 3 of 4
Information Technology Services Agreement | ||||
Exhibit 6 | ||||
Machines |
Unix |
UH130 | piglet | 2D08C08 | IBM RS/6000 | 10-9D58F | Unisys | MQ | |||||||
Unix |
UH135 | bhfunc3 | 2D09F08 | IBM 7026-H50 | 10-01401 | UHG | RIOS | |||||||
Unix |
UH136 | bhfunc4 | 2D09F08 | IBM 7026-H50 | 10-01396 | UHG | RIOS | |||||||
Unix |
UH137 | rouble | 2D09F05 | IBM 7017 | 10-92930 | Unisys | Essbase DECOMMISSIONED 1-7-04 | |||||||
Unix |
UH138 | rupee | 2D09F03 | IBM 7025-F80 | 10-ABD0F | UHG | HR-DEV | |||||||
Unix |
UH139 | yen | 2D09F03 | IBM 7026 | S702610ABDFF | UHG | Finance-Dev | |||||||
Unix |
UH140 | casper | 2D09J02 | IBM 7026 | 10-D212F | Unisys | Employer Portal | |||||||
Unix |
UH141 | wendy | 2D09J02 | IBM 7026 | 10-D213F | Unisys | Employer Portal | |||||||
Unix |
UH142 | DESI | 2D09J10 | IBM 7026 | 10-ABD8F | UHG | MQ Production Server | |||||||
Unix |
UH143 | FRED | 2D09J10 | IBM 7026 | 10-AC9FF | UHG | MQ Production Server | |||||||
Unix |
UH144 | LUCY | 2D09J11 | IBM 7026 | 10-ABD7F | UHG | MQ Production Server | |||||||
Unix |
UH145 | ETHEL | 2D09J11 | IBM RS/6000 | 10-ACAFF | UHG | MQ Production Server | |||||||
Unix |
UH147 | rain | 2D08G16 | IBM 7026 | 10-D745F | UHG | E-Bill/MMR | |||||||
Unix |
UH148 | WEBSTER | 2D08C07 | IBM 7026 | 10-AC3DF | UHG | WebSphere | |||||||
Unix |
UH149 | snickers | 2D09J09 | IBM 7026-6M1 | 10-F12CF | UHG | Siebel Sales | |||||||
Unix |
UH150 | SMOKE | 2C08C16 | IBM 7026 | 10-B1FDF | UHG | AutoSys | |||||||
Unix |
UH152 | skittles | 2D09J09 | IBM 7026 | 10-F6D9F | UHG | Siebel Sales | |||||||
Unix |
UH153 | GORF | 2B08P14 | IBM RS/6000 | 26-18920 | Unisys | Employee Services - DECOMMISSIONED 2/5/04 | |||||||
Unix |
UH154 | SLEET | 2D09J03 | IBM 7026 | 10-212FF | UHG | E-Bill Production Server | |||||||
Unix |
UH155 | SLUSH | 2D09J04 | IBM 7026 | 10-201DF | UHG | E-Bill Production Server | |||||||
Unix |
UH156 | SNOW | 2D09J04 | IBM 7026-6M1 | 10-424FF | UHG | E-Bill Production Server | |||||||
Unix |
UH157 | EBI | 2D08C15 | IBM 7026-6M1 | 10-424BF | UHG | E-Bill Development Server | |||||||
Unix |
UH158 | HAMACHI | 2D08C15 | IBM 7026-6M1 | 10-418CF | UHG | E-Bill Development Server | |||||||
Unix |
UH164 | bhdb32a | 2C08E10 | SUN E6800 | 211H30AA | UHG | UHG **DECOMMISSIONED | |||||||
Unix |
UH166 | TOAD | 2D09J02 | IBM 7028-6C1 | 10-CB79D | UHG | Employer Portal Development | |||||||
Unix |
UH168 | bhutilla | 2C08M13 | SUN 280R | 221C526B | UHG | Production Server | |||||||
Unix |
UH170 | HASHIAD | 2D08F15 | IBM 7026-6M1 | 10-B349F | UHG | E-Bill Broker Production Server | |||||||
Unix |
UH171 | GOMAAD | 2D08F15 | IBM 7026-6M1 | 10-B326F | UHG | E-Bill Broker Production Server | |||||||
Unix |
UH174 | IBAGDEV1 | 2C08M07 | IBM 7026 | 10-B626F | UHG | Development Server | |||||||
Unix |
UH175 | kodiak | 2C08J10 | IBM 7026 | 10-9748A | UHG | PRMS Production | |||||||
Unix |
UH176 | nightmare | 2D09J02 | IBM 7028-6C4 | 10-29FAA | UHG | Portal Reporting Server | |||||||
Unix |
UH177 | hail | 2D08M10 | 7017-S7A | 10-95298 | UHG | Production Server | |||||||
Unix |
UH178 | 2D09L16 | IBM 7026-6M1 | 10-C71FA | UHG | ahab | ||||||||
Unix |
UH179 | cold 1 | 2D08J11 | IBM 7026-6M1 | 10-C56DA | UHG | UHG Server | |||||||
Unix |
UH180 | croc | 2C08M09 | IBM 7028-6C1 | 10-63D6A | UHG | Employment Services Server | |||||||
Unix |
UH181 | leech | 2C08M09 | IBM 7028-6C1 | 10-63D4A | UHG | Employer Services Server | |||||||
Unix |
UH182 | snake | 2C08M09 | IBM 7028-6C1 | 10-63D7A | UHG | Employer Services Server | |||||||
Unix |
UH183 | gecko | 2C08M09 | IBM 7028-6C1 | 10-63D5A | UHG | Employer Services Server | |||||||
Unix |
UH184 | NES-05 | 2D09F09 | SUN V480 | 244V029B | UHG | Server | |||||||
Unix |
UH185 | NES-06 | 2D09F09 | SUN V480 | 245V000D | UHG | Server | |||||||
Unix |
UH186 | Lucan | 2D09F09 | SUN V480 | 245V02FA | UHG | Server | |||||||
Unix |
UH187 | Percivale | 2D09F09 | SUN V480 | 245V02F7 | UHG | Server | |||||||
Unix |
UH188 | 2D09F10 | HP RP7400 | 40CC0FK0VC | UHG | UHG Server | ||||||||
Unix |
UH189 | 2D09F11 | IBM P660 | 10-A760A | UHG | IBM Server - Mystic | ||||||||
Unix |
UH190 | rsttaprod01 | 2D10L01 | IBM 7038-6M2 | 10-0976A | UHG | Production Server | |||||||
Unix |
UH191 | rsttaprod02 | 2D10L01 | IBM 7038-6M2 | 10-975A | UHG | Production Server | |||||||
Unix |
UH192 | rsttatest01 | 2D10L01 | IBM 7038-6M2 | 10-0973A | UHG | Test Server | |||||||
Unix |
UH193 | rsttadev01 | 2D10L01 | IBM 7038-6M2 | 10-0972A | UHG | Development Server | |||||||
Unix |
UH194 | phxprappu1 | 2C09M04 | SUN 280R | 312AD2FA6 | UHG | Server | |||||||
Unix |
UH195 | phxprappu2 | 2C09M04 | SUN 280R | 312AD3FB1 | UHG | Server | |||||||
Unix |
UH196 | phxprdbu1 | 2C09M04 | SUN V480 | 312V0346 | UHG | Server | |||||||
Unix |
UH197 | phxtsappu1 | 2C09M04 | SUN 280R | 312AD10C4 | UHG | Server | |||||||
Unix |
UH198 | phxtsdbu1 | 2C09M04 | SUN V480 | 305V01D0 | UHG | Server | |||||||
Unix |
UH199 | bhapp1 | 2C08M13 | SUN V480 | 315V017C | UHG | Server | |||||||
Unix |
UH200 | bhapp2 | 2C08M13 | SUN V480 | 315V0199 | UHG | Server | |||||||
Unix |
UH201 | bhappc1 | 2C08M13 | SUN V120 | FF31310197 | UHG | Server | |||||||
Unix |
UH202 | bhapp21 | 2D09F08 | IBM 7028-6C4 | 10-8CDFA | UHG | Server | |||||||
Unix |
UH203 | bhapp22 | 2D09F08 | IBM 7028-6C4 | 10-8D0CA | UHG | Server | |||||||
Unix |
UH204 | idrs3 | 2D08J14 | IBM 7026-6H1 | 10-D612A | UHG | IBM Server | |||||||
Unix |
UH205 | bhapp23a | 2D09F08 | IBM 7028-6C4 | 10-AD72A | UHG | IBM Server | |||||||
Unix |
UH206 | bhapp3a | 2C08M13 | SUN V480 | 324V045D | UHG | Sun Server | |||||||
Unix |
UH207 | cpwtsu1 | 2C08J15 | Server (1/21/04: H/W being replaced) | ||||||||||
Unix |
UH208 | cpwdvu1 | 2C08J15 | IBM 7028-6C4 | 10-C314A | UHG | Server | |||||||
Unix |
UH209 | cpwpru1 | 2C08J15 | IBM 7038-6M2 | 10-2649A | UHG | Server | |||||||
Unix |
UH210 | cpwpru2 | 2C08J15 | IBM 7038-6M2 | 10-264BA | UHG | Server | |||||||
Unix |
UH211 | adjpru1 | 2C09J03 | 7028-6C4 | 10-C311A | UHG | Server | |||||||
Unix |
UH212 | adjpru2 | 2C09J03 | 7028-6C4 | 10-C312A | UHG | Server | |||||||
Unix |
UH214 | adjdvu1 | 2C09J03 | 7038-6M2 | 10-2648A | UHG | Server | |||||||
Unix |
UH216 | qstardvu1 | 2C09J04 | 7028-6C4 | 10-C310A | UHG | Server | |||||||
Unix |
UH217 | qstarpru1 | 2C09J04 | IBM 7038-6M2 | 10-264CA | UHG | Server | |||||||
Unix |
UH218 | qstarpru2 | 2C09J04 | IBM 7038-6M2 | 10-264AA | UHG | Server | |||||||
Unix |
UH219 | qstarpru3 | 2C09J04 | IBM 7038-6M2 | 10-264DA | UHG | Server | |||||||
Unix |
UH220 | vtsprfxu1 | 2C08M07 | IBM P630 | 10-66D1A | UHG | Server | |||||||
Unix |
UH221 | vtsprfxu2 | 2C08M07 | IBM P630 | 10-66D0A | UHG | Server | |||||||
Unix |
UH222 | atlasprdbl | 2D09J09 | 7038-6M2 | 10-3727A | UHG | Atlas Project Server | |||||||
Unix |
UH223 | corbatst | 2C08A11 | IBM 7028-6C4 | 10-DB43A | UHG | Server | |||||||
Unix |
UH224 | 2D08G16 | IBM 7038-6M2 | 10-8134F | UHG | Server |
Page 4 of 4
|
Information Technology Services Agreement |
|
||
Exhibit 7 | ||||
Customer Satisfaction Survey | ||||
|
2004 Contract Exhibit Note
The UHS Customer Engagement organization has assumed responsibility for Customer Satisfaction Surveys. Please refer to Exhibit 7A for confirmation of this decision.
Page 1 of 1
|
Information Technology Services Agreement |
|
||
Exhibit 7A | ||||
Customer Satisfaction Survey - Letter | ||||
|
6300 Olson Memorial Highway
P O Box 1459
Minneapolis, MN 55440
Telephone: 612-797-4322
Fax: 612-797-4333
May 26, 1999
Kenneth Hales
Unisys Corporation
3199 Pilot Knob Road
Eagan, MN 55121
Subject: Customer Satisfaction Survey
Dear Ken,
Article 7.02 of the Agreement stipulates that Unisys will conduct periodic customer satisfaction surveys of UnitedHealth Group users of systems operated by Unisys. The UHG Customer Engagement organization has assumed responsibility for conducting customer satisfaction surveys, including areas of performance that encompass Unisys-managed systems. Effective immediately and until further notice, UnitedHealth Group has suspended the requirement for Unisys to perform customer satisfaction surveys.
Sincerely,
Steve Yahn |
Acceptance: Ken Hales |
|
Steve Yahn |
Ken Hales |
|
Project Executive, UnitedHealth Group |
Account Executive, Unisys |
Page 1 of 1
|
Information Technology Services Agreement |
|
||
Exhibit 8 | ||||
Service Locations | ||||
|
Unisys Corporation
3199 Pilot Knob Road
Eagan, MN 55121
UnitedHealth Group
6150 Trenton Lane North
Plymouth, MN 55442
UnitedHealth Group
9900 Bren Road
Minnetonka, MN 55343
Page 1 of 1
|
Information Technology Services Agreement |
|
||
Exhibit 9 | ||||
Key Employees | ||||
|
2004 Contract Exhibit Note
This exhibit was considered to be part of the initial COSMOS transition of services to Unisys, and has been intentionally deleted by both parties for the contract extension.
Page 1 of 1
|
Information Technology Services Agreement |
|
||
Exhibit 10 | ||||
UHS Competitors | ||||
|
UHS Competitors
Aetna |
Anthem |
Assurant |
Blue Cross/Blue Shield Associations |
Cigna |
FHP |
First Health Group Corp. |
Foundations Health |
Health Net |
HealthSource |
Humana |
John Alden |
Oxford |
Pacific Care |
Principal Mutual |
Quintiles Transnational |
Trigon Healthcare, Inc. |
US HealthCare |
Value Point |
Wellpoint |
Note: UHS may amend this list from time to time during the term by providing written notice to Unisys.
Page 1 of 1
|
Information Technology Services Agreement |
|
||
Exhibit 11 | ||||
Unisys Mainframe Outsourcing Rate Card | ||||
|
The purpose of this document is to provide discussion with respect to clarifications with respect to the monthly invoice, a Rate Adjustment, and:
| The Unisys Mainframe Outsourcing Rate Card Model, Exhibit 11 A; |
| The Unisys Mainframe Outsourcing Fixed Payment Schedule, Exhibit 11B; and |
| The Unisys Rate Card Methodology, Exhibit 11C. |
Rate Adjustment.
| Unisys will provide UHS two * * * rate adjustments in favor of UHS. The first * * * rate adjustment will be provided in April 2006, the second in April 2007. Each rate adjustment is contingent upon the existence of a contract for COSMOS and/or DR at April 2006 and April 2007. These installments will be received as credits on the monthly invoice. |
Invoicing.
| As clarification, the new COSMOS production service begins March 31, 2004. However, this agreement states that March usage at a fixed payment amount will be reflected on the April invoice for March usage in arrears. Assuming this service continues to end of contract term, then the January 2009 invoice will reflect the usage of December 2008. |
| A field will be added to the monthly invoice. The field will indicate the cumulative spend to date against the committed minimum total spend. This field will reflect both the COSMOS production service and the Disaster Recovery & Development / Test service. |
General Fixed Payment Schedule.
The parties agree to * * * (the Total Minimum Revenue Commitment) over * * * months, as defined in Exhibit 11B. When the total revenue commitment has been satisfied and the * * * months has been completed, the rate card model, defined in Exhibit 11A, supercedes the Fixed Payment Schedule (Exhibit 11B), which becomes cancelled.
General Rate Card.
The rate card model is a means of computing a monthly invoice from Unisys to UHS for usage of the COSMOS mainframe application. For the invoicing period of * * * through * * * of the agreement, the Fixed Payment Schedule subsumes the Rate Card Model. Nevertheless, the usage patterns and general approaches to variable rates will be tracked in parallel during the * * * months. The usage patterns will be separately reported monthly so as to remain current with the variable rate methodology. When the total revenue commitment has been satisfied and the * * * months has been completed, the rate card model supercedes the Fixed Payment Schedule, which becomes cancelled. The rate card model contemplates:
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 1 of 3
| Agreed usage patterns beginning March 1, 2004 for consumed: |
| Computer Processing Units (CPU), expressed in hours of usage per month, as defined in Exhibit 11C; |
| DASD giga-bytes (gB) (billions) of characters consumed for data bases, as defined in Exhibit 11C; and |
| Tape mounts, as defined in Exhibit 11C; |
| The agreed chargeable per unit rate for each of the categories (CPU hours, DASD, and tape mounts); |
| Agreed COLA provisions; |
| Agreed percentages of reductions each year of the agreement for each of the categories; |
| Agreed discount structures (Usage credits), which offer UHS additional discounts for either increased or reduced (unplanned) usage of the Unisys mainframe platform. |
This model has been used as the agreed format for invoicing for several years.
Specific Rate Card.
| Once the Rate Card becomes effective for billing purposes, Unisys will not invoice UHS for more than * * * CPU hours per month at any time during the Term. In addition, for the invoicing period of * * *, Unisys will not invoice UHS for any incremental DASD or Tape Mounts. |
| COLA is set at * * * per year beginning in January 2005 and is applied to the then-current rates in place for usage in January 2005, 2006, 2007, and 2008. COLA is applied to CPU hours and DASD rates, but not tape mounts. The reason is that increased technology improvements offset what would otherwise be the effect of COLA on tape mounts; |
| Should the actual volume consumed for CPU and DASD exceed or fall below the base volume by * * * or more for 3 consecutive months, then the new base volumes and base rates are adjusted to the prior 3 month average. Note that the beginning base in the exhibit is: |
| * * * CPU hours; and |
| * * * DASD gBs. |
| A volume discount table is in place for CPU and DASD only. The model shown in the exhibit follows this formula, where: |
Base = 100%
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 2 of 3
Base Actual Usage percentage of Base becomes the entry figure into the discount table.
So, if the actual volume is * * * of the base, the units up to * * * receive no discount, the units between * * * and * * * receive a * * * discount, and the units between * * * and the actual volume receive a * * * discount;
| * * * |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 3 of 3
Information Technology Services Agreement - Exhibit 11a
Unisys Mainframe Outsourcing Rate Card
For A-Series/Clearpath Mainframe Environment
For Invoices Dated on or After |
||||||||||||
Metric |
Apr-04 |
Jan-05 |
Jan-06 |
Jan-07 |
Jan-08 |
|||||||
CPU Hours |
Base Volume | * * * | Adjustments applied per item 4 below | |||||||||
Base Rate | * * * | Adjustments applied based on annual reductions and item 4 below | ||||||||||
Base Rate Reduction | * * * | * ** | * * * | * * * | ||||||||
DASD GBs |
Base Volume | * * * | Adjustments applied per item 4 below | |||||||||
Base Rate | * * * | Adjustments applied based on annual reductions and item 4 below | ||||||||||
Rate Reduction | * * * | * * * | * * * | * * * | ||||||||
Tape Mounts |
Base Volume | * * * | * * * | * * * | * * * | * * * | ||||||
Base Rate | * * * | * * * | * * * | * * * | * * * | |||||||
Rate Reduction | * * * | * * * | * * * | * * * | ||||||||
COLA - CPU and DASD only |
* * * | * * * | * * * | * * * |
Volume Discounts - Applicable to CPU & DASD Only |
||||
Greater or Equal to Base Volume |
Less Than Base Volume |
% Discount off Base Rate |
||
* * * |
* * * | * * * | ||
* * * |
* * * | * * * | ||
* * * |
* * * | * * * | ||
* * * |
* * * | * * * | ||
* * * |
* * * | * * * | ||
* * * |
* * * | * * * | ||
* * * |
* * * | * * * |
Additional Terms:
1. | Maximum billable CPU hours is * * * per month. |
2. | Tape mounts are always billed at * * * per mount and are not subject to discounts or COLA. |
3. | The volume discount percentages apply only to units in the range for that particular percentage. For example, if the actual volume is * * * of the base, the units up to * * * receive no discount, the units between * * *-* * * receive a * * * discount, and the units between * * * and the actual volume receive a * * * discount. |
4. | If the actual volume consumed for CPU or DASD exceeds or falls below the base volume by * * *, the base volume and base rate will be adjusted to the prior * * * average. |
5. | For actual consumption below the base volumes for CPU and DASD, UHG will receive a credit of * * * of the current base rate for unused units below the current base volume. |
6 | Unisys will add a new field on the invoice to indicate the cumulative spend to date against the committed minimum total spend. |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Unisys Mainframe Outsourcing Fixed Payment Schedule
For A-Series/Clearpath Mainframe Environment
Exhibit 11B
Month |
Invoice
Received |
Production
Service |
DR &
Development Service |
Cumulative
Spend |
Month
|
Invoice
Received |
Production
Service |
DR &
Development Service |
Cumulative
Spend |
|||||||||
*** |
*** | *** | *** | *** | *** | *** | *** | *** | *** | |||||||||
*** |
*** | *** | *** | *** | *** | *** | *** | *** | *** | |||||||||
*** |
*** | *** | *** | *** | *** | *** | *** | *** | *** | |||||||||
*** |
*** | *** | *** | *** | *** | *** | *** | *** | *** | |||||||||
*** |
*** | *** | *** | *** | *** | *** | *** | *** | *** | |||||||||
*** |
*** | *** | *** | *** | *** | *** | *** | *** | *** | |||||||||
*** |
*** | *** | *** | *** | *** | *** | *** | *** | *** | |||||||||
*** |
*** | *** | *** | *** | *** | *** | *** | *** | *** | |||||||||
*** |
*** | *** | *** | *** | *** | *** | *** | *** | *** | |||||||||
*** |
*** | *** | *** | *** | *** | *** | *** | *** | *** | |||||||||
*** |
*** | *** | *** | *** | *** | *** | *** | *** | *** | |||||||||
*** |
*** | *** | *** | *** | *** | *** | *** | *** | *** |
Added Terms
1 | Following * * * months at this fixed payment schedule, production service rates revert to the rate card (Exhibit 11a). |
2 | Following satisfaction of the Cumulative Spend commitment as shown in this table, the monthly fee for the DR & Development / Test service continues at * * * per month until end of term (or earlier as UHS desires). |
3 | Nothing in this payment schedule precludes UHS from withholding payments for disputed charges. |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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Information Technology Services Agreement |
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Exhibit 11C | ||||
Rate Card Methodology | ||||
|
The following metrics will be used for forecasting and billing consumption for ClearPath disk, processor, and media
ClearPath Disk Billing Metrics
Metrics to be used |
1. Average gigabytes allocated (total for each system) 1 2. Maximum gigabytes allocated any time within a month (total for each system) 1 |
|
Unit of measure | Gigabytes of Fault tolerant disk. | |
How computed | Viewpoint will monitor disk usage by taking snapshots of the disk usage each minute. These minutely samples are automatically consolidated into summary records by Viewpoint (e.g., 15 minute, hourly and daily records). On a monthly basis, the average disk allocated and the maximum disk allocated for each pack family at any point during that month will be reported from data in the daily summary records. | |
What measured |
Concept: all non-system related disk requirements will be measured. (System related disk requirements will be computed).
Specific pack families that need to be included: PRODUCTION SYSTEMS:
All database families DOCTORxxxxxx
ARCPK
AUDIT1
AUDIT2
DSSPK
LAGPK
DBPACK
DBPACKA on MNA17A
CODEPACK
PRTBKUP
PRINTC on MNA17A
PRINTD on MNA17A
PRINTE on MNA17A
FLATPACK
LOGPACK: They use > 140 Million Sectors on MNA17A when they rerun logs back 20 days.
OLAYPACK
SORTPACK
TTRAILPK
WFMPACK |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 1 of 10
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Information Technology Services Agreement |
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Exhibit 11C | ||||
Rate Card Methodology | ||||
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Missing Viewpoint data |
In the event that Viewpoint data is missing or corrupted for any given time period (minute, 15 minute, hour, day, etc.), Unisys will average the data from the previous good time period with the following good time period. For example, if 14 minutes of data were missing, Unisys would average the previous 15-minute sample with the next 15-minute sample to compute an average for the missing period. If 23 hours of data were missing, the previous and next daily samples would be used to compute an average.
Unisys would clearly report exactly what method and samples it used in computing metrics for any lost period. |
1 - | This will be computed from the ClearPath statistic sectors in use. The formula to convert to Gigabytes Allocated = sectors in use * 180 / 1,000,000,000 |
Billing Units
The billing metric will be the sum of the maximum gigabytes allocated (as defined above) for each pack family, for each system, within each month.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 2 of 2
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Information Technology Services Agreement |
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Exhibit 11C | ||||
Rate Card Methodology | ||||
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ClearPath Processor Billing Metrics
Metric to be used | Total Application CPU Hours / Month / Workgroup (database) forecasted on machine that the database is running on. 1 | |
Unit of measure | Viewpoint will capture processor utilization statistics for the various workgroups. The utilization statistics for multi-processor A18s need to be converted into a common metric (A18- 1x Application CPU hours) for that class of machine. 2 Different processor classes (e.g., NX5800) will require a conversion factor to produce compatible hourly projections. The Relative Performance Measure (RPM) as reported by Unisys product specifications will be used to make this conversion. | |
How measured | Computed and tracked via Viewpoint CPU USER PERCENT samples | |
When computed | Viewpoint will monitor processor usage by taking snapshots of the usage each minute. These minutely samples are automatically consolidated into summary records by Viewpoint (e.g., 15 minute, hourly and daily records). The daily records will be used in computing total monthly usage. | |
What measured |
A workgroup will be defined for each database.
For the production machines, one total will be forecasted for each database plus one total for OTHER. OTHER will contain programs that arent easily broken out by database even though their time may be attributable to a particular database. 3 |
|
What programs are included/excluded from measurement |
Since UHS has several thousand programs running in production on the various machines under various user codes, and the list of programs change on a frequent basis, an inclusive list of all programs would be unmanageable.
Excluded programs are:
SYSTEM/A=, A to A Routers SYSTEM/U=, U to A Routers SYSTEM/CO=, SYSTEM/COMS SYSTEM/CA=, SYSTEM/CANDE SYSTEM/CC=, Application to Appl calls (PROD)SYSTEM/=, A to A, U to A (PROD)CCF/=,-- |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 3 of 10
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Information Technology Services Agreement |
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Exhibit 11C | ||||
Rate Card Methodology | ||||
|
Missing Viewpoint data |
In the event that Viewpoint data is missing or corrupted for any given time period (minute, 15 minute, hour, day, etc.), Unisys will average the data from the previous good time period with the following good time period. For example, if 14 minutes of data were missing, Unisys would average the previous 15-minute sample with the next 15-minute sample to compute an average for the missing period. If 23 hours of data were missing, the previous and next daily samples would be used to compute an average.
Unisys would clearly report exactly what method and samples it used in computing metrics for any lost period. |
1 - | When available, the forecast should include a breakout by div within a database |
2 - | The formula for computing the daily Application CPU hours will be: Processor Utilization Percentage * hours/day * # of processors. For example, if a A18- 3x has a 70 % processor utilization within all billable workgroups for a day, then A18 - 1x hours = .70 * 24 * 3 = 50.4 Application CPU Hours. This conversion will be done in a VIEWPOINT expression. |
3 - | OTHER will be defined in Viewpoint as all programs not included in the database workgroups except for the programs specifically excluded from the forecast (as noted above). |
Billing Units
Total application CPU hours per month for all ClearPath machines
Machine/Resource Utilization
In general, for an on-line oriented machine, as the machine utilization approaches saturation, technical support requirements increase exponentially. Efficient and cost effective computer operations requires executing the hardware resources at the highest level possible that doesnt require oppressive human intervention. The billing rates will be based on a best fit of machine utilization and technical resource utilization.
Conversion Factor
Since a variety of processor speeds/models are in use by UHS and it is expected that new processor speeds/models will be used, a conversion must be done to convert application CPU hours on all machines to a common metric. The conversion factor is the multiplier that will be applied to convert that machine to A18 - 1x Application CPU hours (the base metric). For example, * * * hour of * * * hours equates to * * * hours.
Machine Style |
Conversion Factor |
|
A18 - all models |
* * * | |
NX5800 |
* * * | |
NX6800-PLA |
* * * | |
CSL7821-D13 |
* * * | |
CSL7821-D14 |
* * * |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 4 of 10
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Information Technology Services Agreement |
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Exhibit 11C | ||||
Rate Card Methodology | ||||
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Billing Reporting
Unisys and UHS have defined workgroups into which the Viewpoint data will be defined. The hours in these workgroups will be converted to a common metric and summed monthly to provide the total Application CPU hours used. One workgroup exists for each ClearPath database plus one workgroup for all applications (OTHER) that dont easily fit into a database workgroup. Unisys will provide billing detail at the summarized workgroup level.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 5 of 10
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Information Technology Services Agreement |
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Exhibit 11C | ||||
Rate Card Methodology | ||||
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ClearPath Media Mounts Billing Metrics
Metric to be used |
Summary of TAPECOUNTS/MONTHLY/REPORT
This utility looks at several pieces of data in order to come up with the generated number of tapes used that would be comparable to the usage of the older style tape media.
It looks at the AUDITS dataset for the previous months records and does a count of those records (this number is called AUDIT_COUNT).
It looks at the FILES dataset for the previous months records. It counts the number of BLPACKAUDIT records (this number is called BLPACK_AUDIT_COUNT).
While looking at the FILES dataset, it counts the number of old tape media, if any (this number is called OLDTECH_COUNT).
Also while looking at the FILES dataset, it looks at each new tape media record, looking up the associated record in the TAPENAME dataset based on the tape name, retrieving the historical average sectors value which is based on the old tape media storage size for that particular tape name. It then divides the actual sectors read/written for this tape by the historical average sectors value, with the result being the computed number of tapes used if they had been old style tapes. This computed number for each FILES record is summed into NEWTECH_COUNT.
Using these pieces of data, the final calculation is:
(AUDIT_COUNT [true # of audit trails] BLPACK_AUDIT_COUNT [count of BLPACK tapes made backing up audit trails]) + OLDTECH_COUNT + NEWTECH_COUNT. |
|
Unit of measure | Tape mount count. | |
How computed |
There is a suite of ALGOL utility programs: 1. (TECH)O/TAPEDB/LOG/TAPENAMES on DPOLIB 2. (TECH)O/TAPEDB/RECORd/AUDITS on DPOLIB 3. (TECH)O/TAPEDB/TAPECOUNTS/MONTHLY/REPORT on DPOLIB 4. (TECH)O/TAPEDB/GIGABYTES on DPOLIB |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 6 of 10
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Information Technology Services Agreement |
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Exhibit 11C | ||||
Rate Card Methodology | ||||
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The first utility is the program that captures the data from the SUMLOG and inserts records into a DMSII database called TAPEDB. This utility uses an MCP interface called REPORT_LOG_ENTRY. This interface allows the program to monitor various events on the NX hosts. The interface requires the specification of which SUMLOG major and minor record types to monitor. The MCP notifies this utility in real time whenever these SUMLOG record types are logged, and then creates a FILES dataset record of TAPEDB for each tape that is read from or written to.
The second utility is a program that inserts a record into the AUDITS dataset of TAPEDB for each audit trail created. This process will be explained in a later section.
The second and third utilities are run on a monthly basis to read the data in the TAPEDB and to create two monthly reports. The MONTHLY/REPORT utility reads records from TAPEDB and creates the generated tape count report [The term generated will be defined later]. The GIGABYTE utility reads records from TAPEDB and creates the GIGABYTE report.
The following log record is monitored by LOG/TAPENAME utility:
Major type 1 (Job or task entry) Minor type 6 (File close)
These SUMLOG major/minor types are documented in the ClearPath SUMLOG Programming Reference Manual (form number 8600-1807) |
||
What measured | Prior to April 1999, a different utility was used to record tape usage. In April of 1999, the utilities mentioned above were created to track tape usage. This new methodology for monthly billing was created due to the implementation of new tape media technology. This new technology introduced new tape media (style 9840), allowing a vastly greater amount of data to be stored on each tape roughly 100 times more data. Since tape billing was based on the number of tapes read from/written to, the use of the new tape media would reduce the number of tapes being used and consequently reduce our billing revenue. In order to be revenue neutral (trying to keep the monthly tape billings consistent), the TAPECOUNTS/MONTHLY/REPORT was created to generate a monthly number that was comparable to the number of tapes used using the older style tape media. |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 7 of 10
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Information Technology Services Agreement |
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Exhibit 11C | ||||
Rate Card Methodology | ||||
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The DMSII database TAPEDB has several datasets defined.
The first dataset is the FILES dataset. A summary of the STORE/DISCARD algorithm follows. This algorithm only determines if the SUMLOG record should be stored or discarded. It does not determine what is stored in the various fields of the FILES dataset record (this will be discussed later).
It should be noted that a dataset TAPENAMES is also used and is a list of tape names. Associated with each tape name is a field that indicates the tape type. Tape types can be either: DMUTILITY BLPACK BLDIST COPYAUDIT OTHER (Library/maintenance, dumpall or via a program output)
The program looks at the SUMLOG record and retrieves the label of the tape. It then searches the TAPENAMES dataset for a record having that tape name. If it finds a record, it retrieves the tape type. If it doesnt find a record, the tape type defaults to OTHER. The program then does a CASE on tape type:
If the tape type is BLPACK or BLDIST, the record is stored in to the FILES dataset.
If the tape type is OTHER, it searches the FILES dataset for a record with this TAPENAME and the SERIAL NUMBER of the tape. If a NOTFOUND is encountered (record has NOT been stored before), the record is STORED. If a record IS found, it updates various fields and then STORES the modified record (this prevents us from storing any duplicate SUMLOG data regarding a specific TAPENAME/SERIALNO combination).
If the tape type is DMUTILITY, the program looks at 3 fields within the SUMLOG record: READ_COUNT, WRITE_COUNT and TRANCOUNT. |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 8 of 10
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Information Technology Services Agreement |
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Exhibit 11C | ||||
Rate Card Methodology | ||||
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If the TRAN_COUNT is zero, the record is discarded.
If the TRAN_COUNT is GTR zero, AND if the READ_COUNT was GTR zero AND if this TAPENAME and SERIALNO combination was NOT in the FILES dataset, then STORE this record. If this TAPENAME and SERIALNO combination is in the FILES dataset, we discard it.
If the TRAN_COUNT was GTR zero, AND if the READ_COUNT is zero and if the WRITE_COUNT is GTR zero, we store the record.
This should account for ALL cases where tape type is DMUTILITY. If not, the default is NOT to store the record.
For a tape type of COPYAUDIT, the program looks at the READ_COUNT value. If it is GTR zero, we store this record (Tape is read in via a COPYAUDIT task or via DATABRIDGE). If the READ_COUNT is zero, this implies the tape was being written to and we discard this record based on the assumption that DATABRIDGE reads ALL audit trails from a COPYAUDIT tape and we will be storing this record when we encounter the non-zero READ_COUNT SUMLOG record.
For all other tape type cases that are undefined, the record is stored.
This utility and database (TAPEDB) was implemented on all UHS production hosts and also MNA17B. The utility stays running in the mix on a continuous basis and has been running since early April 1999. The purpose of this database is to track actual tape usage AND also to track the number of sectors being stored on each tape.
In the October/November, 1999 timeframe, the Unisys Internal standard method of backing up of audit trails was implemented on the UHG hosts. This method backs up the audit trails via BLPACK placing numerous audit trails onto one tape instead of the previous method of using COPYAUDIT to put one audit trail onto one tape. Since this means much less tapes are created, a process was devised to count the number of audit trails being created. This necessitated the creation of another dataset called AUDITS and a utility that ran out of the COPYAUDIT WFL that basically stored one record into the AUDITS dataset for each audit trail being verified by COPYAUDIT. This utility is the RECORD/AUDITS utility. |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 9 of 10
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Information Technology Services Agreement |
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Exhibit 11C | ||||
Rate Card Methodology | ||||
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When we implemented the backing up of the audit trails via BLPACK, we created a new TAPE NAME of BLPACKAUDITS. This allows us to track the number of tapes created by BLPACK for the backing up of audit trails. |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 10 of 10
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Information Technology Services Agreement |
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Exhibit 12 | ||||
Disaster Recovery Services | ||||
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1) | As part of the Base Services, Unisys will provide the Disaster Recovery Services identified in Exhibit 1. |
2) | As part of the Base Services, Unisys will implement those portions of UHS Disaster Recovery Plan applicable to the Services. |
3) | The services and functions provided by UHS existing Disaster Recovery Plan and the Disaster Recovery Agreement will represent the baseline scope, service level, priority, responsiveness, performance and system configuration requirements for disaster recovery services provided by Unisys under this Agreement. |
4) | Disaster declarations will be at UHS sole discretion and any resulting network fees are payable by UHS. If ASR 04024 is terminated for any reason, UHS will be responsible for applicable declaration and/or usage fees related to the Base Services under this Exhibit 12. |
5) | During the term, Unisys may propose to UHS that Unisys provide the disaster recovery capability and services itself or obtain them from a different vendor, providing that UHS consents and that the scope, access, priority, service level responsiveness, performance and systems configuration requirements of such services shall not be less than those provided to UHS under its current Disaster Recovery Plan. The backup facility and Unisys primary processing facility shall be sufficiently distant from the primary facility such that a single event would not compromise the backup facility and processing facility simultaneously. |
6) | As part of the Base Services, Unisys will provide a designated Service Center representative who is knowledgeable in disaster recovery and in UHS Disaster Recovery Plan to serve as a single point of contact for disaster recovery-related communications and activities. |
7) | As part of the Base Services, Unisys, in conjunction with UHS and other applicable vendors, will participate in updating the UHS Disaster Recovery Plan on an annual basis. Prior to completing installation of new machines or software into production in accordance with the change management processes and procedures, Unisys, will assist UHS and other applicable vendors, in updating the UHS Disaster Recovery Plan as appropriate to reflect such items. |
8) | As part of the Base Services, Unisys, upon the request of and cooperation with UHS will test the Disaster recovery Plan not more than twice a year. |
9) | Unisys is not responsible for logical network or end user recovery. |
Page 1 of 1
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Information Technology Services Agreement |
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Exhibit 13 | ||||
Audit Procedures | ||||
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UHS Internal Audit Department (IAD) or its authorized third party auditors will perform periodic audits based on a universe of auditable areas, the results of other reviews, and management requests. These audits will be performed in a manner consistent with generally accepted auditing principles and pursuant to the terms of the Agreement. The procedures followed will consist of, but not be limited to, the following:
Type II SAS 70 letter.
Pursuant to the terms of Article 21 of the Agreement, Unisys will support UHS in providing the Type II SAS 70 letter. This letter will be reviewed by UHS Internal Audit Department or its authorized third party auditors as needed, in planning audits.
Annual planning.
Each year, UHS Internal Audit Department (IAD) produces its annual plan. The applicable portion of the plan will be distributed to Unisys and UHS Project Executives. This plan, however, may be altered during the year.
Initiation of the audit.
A visit to the data center for an overview of an area may be done as part of the annual plan. This may include questionnaires, interviews, and walk-throughs. IAD will use this information to determine the scope and objectives of the audit and the general time frame in which it will be performed.
Announcement of the audit.
Written notification will be sent to UHS IS management and Unisys indicating the scope, objectives, and timing of the audit. It may also indicate the need for specific documentation and/or other materials. Occasionally audits/investigations may require immediate access, coordinated through appropriate Unisys personnel. All requests for audit activities will be processed using the Request for Service Process.
Perform the audit.
IAD or its authorized third party auditors will visit the data center and will require access to those individuals necessary to assist in the performance of the fieldwork and testing. During this phase IAD or its authorized third party auditors may require logical access to system software, application software, and data files associated with them. UHS will provide the software and date file access as required by the specific audit. Physical access to the data center may also be required.
Discuss findings.
All findings and recommendations will be discussed with UHS and Unisys as soon after they are determined as possible.
Responses to Recommendations.
Unisys will be responsible for providing a response addressing each audit recommendation and an action plan for implementing the recommendation.
Issue reports.
A draft of the audit report will be issued for review and discussion purposes. Upon completion of the process a final report will be issued to appropriate individuals at both UHS and Unisys.
Page 1 of 2
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Information Technology Services Agreement |
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Exhibit 13 | ||||
Audit Procedures | ||||
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Follow up.
Each quarter, Unisys will provide a written status of all outstanding audit recommendations. IAD or its authorized third party auditors will perform periodic follow-up audits to ensure compliance with implemented recommendations.
Page 2 of 2
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Information Technology Services Agreement |
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Exhibit 14 | ||||
Travel Policy | ||||
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TRAVEL AND EXPENSE REIMBURSEMENT POLICY FOR CONTRACTORS
Unisys failure to comply with these policies may result in denial of reimbursement for claimed expenses, at UHS option.
Expense Guidelines
1. | Air Transportation |
a. | All domestic business air travel will be by coach/economy class. Upgrades are allowed at Unisys expense as long as the lowest logical fare is utilized. |
b. | International flights in excess of 10 hours may be booked in business class. |
c. | When making airline reservations, Unisys is required to accept flights that utilize lowest logical fare routing, as such term is defined and/or generally used in the travel industry. Unisys personnel will be required to take connecting flights, direct flights or go to an alternate airport if the routing does not increase the one-way total elapsed trip time by more than two hours (e.g. 2 hours before or after requested departure or arrival time). |
d. | Exceptions to utilizing lowest logical fare routing must be approved by UHS in advance. |
e. | Frequent Flyer program benefits must in no way influence flight selection. |
f. | Unisys must make travel reservations for its personnel as soon as they are made aware of the need for travel to take advantage of lower airfares. |
g. | E-tickets should be used whenever possible in place of pre-paid tickets to reduce costs. |
h. | UHS does not reimburse costs of flying private aircraft. |
2. | Car Rental |
a. | Unisys personnel may rent a car of compact or intermediate size. Three (3) or more Unisys personnel traveling together may rent a full size vehicle. |
b. | Car rentals should be utilized only when the cost of the rental car is more cost effective than the usage of hotel transportation, personal vehicles, airline, rail travel or taxi. |
c. | Every reasonable effort must be made to return the rental car to the original rental location (unless approved in advance for a one way rental). Cars must be returned on time to avoid additional hourly charges (late fees begin to accrue after a 1-hour grace period), and with a full tank of gas. |
d. | Every attempt should be made to refuel the car to avoid refueling charges imposed by the rental car company. Unless you plan to utilize an entire tank of gas and return it empty, commitments to refuel cars at the car rental agency are not economical and should not be made. Gas purchased for the rented vehicle at a service or gasoline station is always reimbursable. |
3. | Parking |
a. | Parking will be reimbursed to a reasonable level. |
Page 1 of 2
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Information Technology Services Agreement |
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Exhibit 14 | ||||
Travel Policy | ||||
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4. | Ground Transportation |
a. | Unisys personnel are expected to use the most economical ground transportation appropriate under the circumstances and should generally use the following, in this order of desirability: |
b. | Courtesy cars/Hotel shuttle services; |
c. | Airport limousine or buses; and |
d. | Taxis. |
5. | Lodging |
a. | Unisys personnel are expected to use the most economical lodging appropriate under the circumstances, subject to the following additional guidelines: |
b. | All hotels must be booked through a travel agency, NOT directly with the hotel. Reservations made directly with hotels will not be reimbursed. |
c. | Unisys will not be reimbursed for no-show charges. |
d. | Frequent Guest programs may in no way influence hotel choice. |
e. | No hotel phone calls will be reimbursed. |
6. | Meals |
a. | Aggregate daily individual meal expenses may not exceed $40. |
b. | Meals will be reimbursed for actual expense. |
c. | A receipt must be provided with the expense report. |
d. | Tear Tabs are not, under any circumstances, acceptable meal receipts. |
7. | Personal expenses incurred while traveling are not reimbursable. |
Expense Report Submission
The following original documentation, at a minimum, is required for all expenditures:
Page 2 of 2
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Information Technology Services Agreement |
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Exhibit 15 | ||||
Subcontractors | ||||
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Vendor |
User |
|
Burns Security | Facilities | |
Honeywell | Unisys Eagan Service Center | |
Hunt Electric | Facilities | |
Iron Mountain | Unisys Eagan Service Center | |
Quicksilver | Unisys Eagan Service Center | |
Adecco | Unisys Eagan Service Center | |
Anixter | Facilities |
Page 1 of 1
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Information Technology Services Agreement |
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Exhibit 16 | ||||
Termination Assistance Services | ||||
|
Upon termination or expiration of the Agreement, at UHS option, Unisys will provide assistance in transferring contracted operations and systems to either UHS and/or another vendor. UHS primary objectives for the Project Turnover task are as follows:
| Provide for an orderly and controlled transition to either UHS or a successor of Unisys. |
| Minimize any disruption of processing and services provided to the users of UHS systems. |
| Retain the value of the applications systems, procedures, and operating practices developed during the relationship with Unisys, in a manner equal to that which might have been achieved if UHS had itself performed the Services. |
Should UHS decide, at the expiration or termination of the Agreement, to develop its own data processing facilities, Unisys will be required to support the turnover of UHS entire system. Unisys must also provide information about the systems used by Unisys to process UHS account and to enable UHS to configure and price data processing systems for running its current workload.
Should UHS decide, at the expiration or termination of the Agreement, to choose another vendor, Unisys will be required to support the turnover of UHSs entire system to such vendor. Unisys must also provide information about the systems used by Unisys to process UHSs account.
The responsibility of both UHS and Unisys to protect the confidentiality of each others data and proprietary information will survive the termination or expiration of the Agreement. Upon termination or expiration of the Agreement, each party will return to the other party all confidential and proprietary information and materials.
Unisys will provide, and UHS will approve, a plan for operational turnover of all software and accumulated data files, documentation, and other related information to UHS or another vendor, in order to allow a smooth transfer of the operation. All of the above must be made available in the machine-readable format then in use by Unisys.
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Information Technology Services Agreement |
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|||
Exhibit 17 | ||||
Termination Charges | ||||
|
Termination on or Before |
Termination
Charge Per Article 25.01 |
Termination
Charge Per Article 25.02 |
||
3/31/2004 |
*** | *** | ||
4/30/2004 |
*** | *** | ||
5/31/2004 |
*** | *** | ||
6/30/2004 |
*** | *** | ||
7/31/2004 |
*** | *** | ||
8/31/2004 |
*** | *** | ||
9/30/2004 |
*** | *** | ||
10/31/2004 |
*** | *** | ||
11/30/2004 |
*** | *** | ||
12/31/2004 |
*** | *** | ||
1/31/2005 |
*** | *** | ||
2/28/2005 |
*** | *** | ||
3/31/2005 |
*** | *** | ||
4/30/2005 |
*** | *** | ||
5/31/2005 |
*** | *** | ||
6/30/2005 |
*** | *** | ||
7/31/2005 |
*** | *** | ||
8/31/2005 |
*** | *** | ||
9/30/2005 |
*** | *** | ||
10/31/2005 |
*** | *** | ||
11/30/2005 |
*** | *** | ||
12/31/2005 |
*** | *** | ||
1/31/2006 |
*** | *** | ||
2/28/2006 |
*** | *** |
Additional Terms
1. | The specific termination charge is dependent on the reason for termination, as described in articles 24 and 25, and as a result will be either per article 25.01 (as shown above) or article 25.02 (as shown above), but not both. |
2. | The termination charges shown above include payment for the last month of service. No invoice will be issued after termination; ie, termination on 9/30/2004 would result in a termination charge of * * *. There would not be an invoice issued in October for September service. |
3. | There are no termination charges applicable for termination after 2/28/2006. |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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Information Technology Services Agreement |
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Exhibit 18 | ||||
Application Resource Request and Rates | ||||
|
Application Resource Request Form
Utilize the UHS/Unisys Request For Service process and form.
Application Resource Rate Table
Please refer to attachment A, Application Resource Request Rate Table
Page 1 of 1
Attachment A
Application Resource Rate Table
Description |
Hourly Rate |
|
Consultant 1 |
* * * | |
Consultant 2 |
* * * | |
Consultant 3 |
* * * | |
Consultant 4 |
* * * | |
Architect 1 |
* * * | |
Architect 2 |
* * * | |
Architect 3 |
* * * | |
Technology Architect |
* * * | |
ArchitTure Speclst 1 |
* * * | |
ArchitTure Speclst 2 |
* * * | |
ArchitTure Speclst 3 |
* * * | |
ArchitTure Speclst 4 |
* * * | |
Consulting Engineer |
* * * | |
HW or SW Engineer 1 |
* * * | |
HW or SW Engineer 2 |
* * * | |
HW or SW Engineer 3 |
* * * | |
HW or SW Engineer 4 |
* * * | |
HW or SW Engineer 5 |
* * * | |
HW or SW Engineer Mgr 1 |
* * * | |
HW or SW Engineer Mgr 2 |
* * * | |
Tech Services Support |
* * * | |
Systems Analyst 1 |
* * * | |
Systems Analyst 2 |
* * * | |
Systems Analyst 3 |
* * * | |
Systems Analyst 4 |
* * * | |
Network Design Engineer 1 |
* * * | |
Network Design Engineer 2 |
* * * | |
Network Design Engineer 3 |
* * * | |
Network Design Engineer 4 |
* * * | |
Programmer 1 |
* * * | |
Programmer 2 |
* * * | |
Programmer 3 |
* * * | |
Programmer 4 |
* * * |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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Information Technology Services Agreement |
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Exhibit 19 | ||||
Resource Usage Reports and Data | ||||
|
UHS will require various reports detailing UHS resource usage. Resource reports will primarily focus on the following elements:
| CPU Time (application) |
| Prime |
| OffPeak |
| Mass Storage (application) |
| Tape Mounts (application) |
Resource reports will be required with a variety of detail levels, groupings/summarizations, reporting periods and sort options. UNISYS will generate the resource usage reports and provide them to UHS in both hardcopy and electronic formats. UHS will also be provided with access to the UNISYS reporting tool(s) for the purpose of ad-hoc report generation.
In addition to the reports, UHS will also require electronic access to the data used to generate the resource reports for input into appropriate UHS charge-back systems.
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Information Technology Services Agreement |
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Exhibit 20 | ||||
Form of Performance Report | ||||
|
This exhibit provides the framework for the type and form of performance reports. The actual reports and their respective form and content are to be agreed upon by the Parties.
1. | Daily Production Exception Reports |
On a daily basis, Unisys will report on severity of problems encountered in the previous 24 hours.
1.1 | Problem reports impacting production batch processing will include: |
a) | the date and the duration of the problem |
b) | description of the problem |
c) | business function impact |
d) | temporary fix or bypass |
e) | permanent solution (including time and date) |
f) | current status (closed permanently or awaiting permanent fix) |
1.2 | Problem reports impacting production on-line processing will include: |
a) | the date and the duration of the problem/outage |
b) | description of the problem |
c) | business function impact |
d) | temporary fix or bypass e) permanent solution (including time and date) |
f) | current status (closed permanently or awaiting permanent fix) |
2. | Monthly Service Level Reports |
Service level reports will be provided to United HealthCare by the tenth workday of each month. The following reports will be provided:
2.1 | Average response time reports by business function as defined in the SLA, and during prime versus total hours, as defined in the SLA. These will be measured weekly. |
2.2 | Production availability by business function, as defined in in the SLA, and during prime versus total hours, as defined in the SLA. These will be measured weekly. |
2.4 | Monthly reports of security violations will be made available to United HealthCare. These reports will include lists of unauthorized attempts to access United HealthCare data. |
2.5 | Unisys will provide monthly help desk statistics that identify service levels by analysis of calls placed to the Help Desk, as well as tickets open/closed. Phone statistics will include: total number of calls received, average speed answered, and percentage abandoned. Ticket breakdown will be as follows: open/closed by priority call, total initiated, total closed, and total open (at end of reporting cycle). |
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Information Technology Services Agreement |
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Exhibit 20 | ||||
Form of Performance Report | ||||
|
3. | Daily Snapshots |
4. | Weekly Score card |
5. | RCRP (root cause remediation plan) reports as required |
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Information Technology Services Agreement |
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Exhibit 21 | ||||
UHS Strategic Plan | ||||
|
2004 Contract Exhibit Note
This exhibit was considered to be part of the initial COSMOS transition of services to Unisys, and has been intentionally deleted by both parties for the contract extension.
Page 1 of 1
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Information Technology Services Agreement |
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Exhibit 21B | ||||
Ongoing and Future Projects | ||||
|
2004 Contract Exhibit Note
This exhibit was considered to be part of the initial COSMOS transition of services to Unisys, and has been intentionally deleted by both parties for the contract extension.
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Information Technology Services Agreement |
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Exhibit 22 | ||||
Procedure Documentation Outline | ||||
|
Unisys, in cooperation with UHS, will develop necessary procedures addressing the functional areas defined below in an agreed to format, and maintain these procedures on the UHG/Unisys extranet web site:
| UHS Request Procedures |
| System User IDs |
| Help Desk and Alert Communications |
| Systems Configurations |
| Network Information |
| UHS Applications Support |
| Disaster Recovery Procedures |
| Tape Library |
| Computer Operations |
| Systems Support |
| Product Administration |
| Storage Management Procedures |
| Unisys/ UHS Contact Lists |
| Security Access Procedures |
| Change Control |
Unisys will utilize the most current version of the UHS Change Control Standards and Procedures document and the associated change control management software application for change management requirements relating to this contract.
These procedures will be working documents and will change from time to time as required. Unisys will maintain these documents with periodic reviews and approval by UHS.
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Information Technology Services Agreement |
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Exhibit 23 | ||||
Integrated Change Control Manual Outline | ||||
|
2004 Contract Exhibit Note
This Exhibit has been intentionally deleted. Please refer to the UHS Change Control Manual provided on the UHS and Unisys extranet website.
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Information Technology Services Agreement |
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Exhibit 24 | ||||
UHS Affiliates | ||||
|
For purposes of the Agreement, the term Affiliate, as it relates to UHS, shall in addition include any and all managed care plans or other entities with whom UHS has entered into a contract for the provision of administrative or similar services, including but not limited to the following:
Allina
Medica
Principal Health Care St. Louis
Physicians Plus Insurance Company
PHP, Inc.
Page 1 of 1
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Information Technology Services Agreement |
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Exhibit 25 | ||||
Deliverable Schedule | ||||
|
2004 Contract Exhibit Note
This exhibit was considered to be part of the initial COSMOS transition of services to Unisys, and has been intentionally deleted by both parties for the contract extension.
Page 1 of 1
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Information Technology Services Agreement |
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Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
Revision History
Modifications to this document must be mutually accepted and approved by UnitedHealth Group and UNISYS.
Date |
Revision
|
Description |
Distributed Server
|
|||
7/5/00 |
3.3 | AR:M On-Line Availability Modifications. |
Mark Iannaci
Steve Yahn |
|||
3/01/01 |
3.4 | Sections 1 & 3: DRMICA database has been added to all measurements. |
Mark Iannaci
Steve Yahn |
|||
4/01/01 |
Section 1: A-Series changed to ClearPath. | |||||
4/25/01 |
Section 3: All A2A & U2A selected transactions removed due to new routing process. ViewPoint replaced with Resource DB. | |||||
5/01/01 |
Sections 1 & 3: DRINDIGO & DRPHOA databases have been removed. These databases have been merged with DRCHARLIE database. | |||||
7/01/01 |
Section 1: Cosmos On-line Availability has been changed from *** (effective 7/1/01).
Section 2: ARE removed from metrics. |
|||||
7/12/01 |
Section 1: MNA17B (development) availability has been removed from the SLA. | |||||
8/01/01 |
Section 7: Critical Batch Job goal of *** assigned.
Section 7.8 (SLA Expectations) added for SRQs and PDS job completion. |
|||||
8/31/01 |
Section 11, 12, & 13: Macrofiche added to SLA. | |||||
10/15/01 |
Exhibit A: A listing of all Critical Batch jobs added to SLA.
Section 7: Critical Batch Job goal of *** assigned. |
|||||
11/1/01 |
Section 2.3: AR:M Availability modifications. | |||||
12/17/01 |
Exhibit A: The following jobs were removed from the Critical Jobs list by UHG:
1). XXX-AI5050,
2). All Pool Ledger Jobs:
SSS-PL-CLAIMS SSS-PLREV-PRELIM1 SSS-PLREV-PRELIM2 SSS-PLREV-FINAL |
|||||
5/24/02 |
3.5 | Section 7.8: PDS expectation added to document. |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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Information Technology Services Agreement |
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Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
Date |
Revision
|
Description |
Distributed Server Services Acceptance |
|||
6/01/02 |
3.5 | Section 5.6: Schedule Change Requests (SCRs) changed from *** business days. | ||||
2/13/04 |
3.6 |
Exhibit A: updated to reflect new Critical jobs
Section 2: Remove IBM On-line Availability
Section 3.8: Change GI703 transaction goal from ***
Section 4: Remove IBM CICS Transaction Response Time
Section 5: Change Schedule Change Request (SCR) to Schedule Update Form (SUF)
Section 5.6 & 5.8: Change SUF goal from ***
Section 6.3: Add verbage for Incident Mgmt. Policy and procedure
Section 6: Change Problem Resolution to Incident Management
Section 6.8: Change Incident Mgmt. Goal from ***
Section 7.3:Add electronically as SRQ option. Remove JOBTRACK from SRQ section. Add 14:00 deadline for SRQs
Section 7.6: Change *** to *** for Regular Batch Jobs
Section 7.9 Change Critical Batch Jobs Goal to reference EXHIBIT A and the ASLE.
Section 15: Change owner for UHG |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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Information Technology Services Agreement |
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Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
Date |
Revision |
Description |
Distributed Server
|
|||
2/17/04 |
3.7 |
Exhibit A Critical job list): Delete section
Section 6.3: Updated Titles for UHG
Section 7: Delete note regarding the SLA still being in development
Section 7.3: Replace ASAP/WFL with BLSCHED. Add location of ASLE document on extranet.
Section 7.8: Change expectation from ***
Section 7.9: Remove statement referencing Exhibit A
Section 9 (Application project tracking): Delete section
Section 10 (Project tracking): Delete section
Section 11 (Macrofiche Sys. Avail): Delete and move to independent Macrofiche SLA
Section 12 (Macrofiche App. Avail): Delete and move to independent Macrofiche SLA
Section 13 (Macrofiche Response Time): Delete and move to independent Macrofiche SLA
Section 14: Updated titles
Section 15: Update Unisys Title
Section 7.3: Added definition for PDS
Section 7.8: Added verbage for expectation |
||||
2/19/04 |
3.8 |
Section 6.8: Goal changed to from ***
Section 3.3: Language added to reflect removal of HO626 & HO180 transactions from DRMICA
Section 8.8: Change Goal to Expectation |
||||
2/20/04 |
4.0 | Changes from versions 3.6 3.8 accepted | ||||
3/11/04 |
4.1 | Changes to section 4, Incident Management to include new goals | UHS/Unisys Contract Team |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 3 of 22
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Information Technology Services Agreement |
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Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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Information Technology Services Agreement |
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Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
5.6. |
F ORMULA |
18 | ||
5.7. |
R EPORTING |
18 | ||
5.8. |
S ERVICE L EVEL E XPECTATION |
19 | ||
5.9. |
S ERVICE L EVEL G OAL |
19 | ||
5.10. |
A CCOUNTABILITY |
19 | ||
6. |
ASR PROCESSING | 20 | ||
6.1. |
P URPOSE |
20 | ||
6.2. |
A PPLICABILITY |
20 | ||
6.3. |
D EFINITIONS |
20 | ||
6.4. |
K EYWORDS |
20 | ||
6.5. |
M ETRICS |
21 | ||
6.6. |
F ORMULA |
21 | ||
6.7. |
R EPORTING |
21 | ||
6.8. |
S ERVICE L EVEL E XPECTATION |
21 | ||
6.9. |
A CCOUNTABILITY |
21 | ||
7. |
CONTACTS | 22 | ||
8. |
CHANGE HISTORY | 22 |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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Information Technology Services Agreement |
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Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
INTRODUCTION
This document states the levels of service that Unisys will provide to UnitedHealth Group. It contains mutually agreed to goals and expectations. Each of these definitions is stated below. The mutually agreed upon Performance Reports are attached hereto as Attachment 26A.
SLA DEFINITIONS
Goal: The Service Level Goal is the level of performance Unisys will strive to meet or exceed.
Expectation: The expected level of performance. However, it is not measured or reported as part of the Service Level Agreement.
1. COSMOS ON-LINE AVAILABILITY
1.1. Purpose
The purpose is to measure and report the on-line availability of ClearPath COSMOS databases within the Unisys Environment. The measurement will be reported to UnitedHealth Group and used to evaluate Unisys performance against the service level.
1.2. Applicability
On-line Availability for COSMOS databases.
1.3. Definitions
Unisys Environment | The hardware, software, network and operational components Unisys provides to UnitedHealth Group. This includes the mainframe systems, system software, and the UHG Network at the ESC. | |
On-line Database Availability | The database measured is available if any user can process a transaction through the UHG Network at the ESC and the database measured. This applies only to the Unisys Environment. | |
Network Availability | The UHG Network at the ESC is available for use. This includes the network that supports UHG hosts up to the AT&T Solutions presence at the ESC. | |
Total Downtime |
Total Downtime is any period where On-line Database service is not Available during the Available Period. Total Downtime includes all Downtime events within the Unisys Environment regardless of the cause of the Downtime. Unisys attributable Downtime is included in Total Downtime. Downtime due to UHG applications and procedures is included. Periods of Downtime during Scheduled Downtime are excluded.
When the Downtime is foreseeable, UHG Availability Management and Unisys Service Delivery Management will discuss and agree on the time and duration of the Downtime prior to the activity.
UHG Availability Management and Unisys Service Delivery Management will determine who every Downtime event is attributed to. |
|
Unisys Downtime | Unisys Downtime is any period where Unisys is responsible for On-line Database Downtime during the Available Period. Downtime due to UHG applications and procedures is not included. Downtime events during Scheduled Downtime are not included in the Downtime metric. |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 6 of 22
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Information Technology Services Agreement |
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Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
Available Period |
Production M-F 05:30 to 00:30 CT Sa-Su 05:30 to 00:30 CT |
|
Scheduled Downtime |
Maintenance- Production
2nd Sa/Su from 21:00 - 05:30 4th Sa/Su from 21:00 - 05:30
Database Reorganizations - Production
3rd Sa/Su from 21:00 - 05:30 |
|
Workload Forecasts |
Unisys may be exempted from a Service Level Goal if the actual resource utilization exceeds the forecast resource utilization. Actual resource utilization must exceed the forecast by a sufficient magnitude to jeopardize Unisys ability to meet the Service Level Goal. A Service Level Goal may only be exempted with the concurrence of UHG Service Delivery Management and the Director of UHG Service Delivery which concurrence will not be unreasonably withheld.
Unisys may not be accountable for one individual service level due to workload growth issues but accountable for all other service levels. |
|
Service Level Goal |
*** |
1.4. Keywords
UHG, SLA, AVAILABILITY, CLEARPATH
1.5. Metrics
The following metrics will be measured on the Production host:
%Total Available DRALPHA |
%Unisys Available DRALPHA | |
%Total Available DRBRAVO |
%Unisys Available DRBRAVO | |
%Total Available DRCHARLIE |
%Unisys Available DRCHARLIE | |
%Total Available DRDELTA |
%Unisys Available DRDELTA | |
%Total Available DRECHO |
%Unisys Available DRECHO | |
%Total Available DRFOX |
%Unisys Available DRFOX | |
%Total Available DRGAMMA |
%Unisys Available DRGAMMA | |
%Total Available DRHALO |
%Unisys Available DRHALO | |
%Total Available DRJAVA |
%Unisys Available DRJAVA | |
%Total Available DRLIMA |
%Unisys Available DRLIMA | |
%Total Available DRMICA |
%Unisys Available DRMICA | |
%Total Available Overall |
%Unisys Available Overall |
1.6. Formula
Production:
% Total Available <database> |
= |
1 - (Total Downtime / (Available Period - Scheduled Downtime) * 100 |
||
% Unisys Available <database> |
= |
1 - (Unisys Downtime / (Available Period - Scheduled Downtime) * 100 |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 7 of 22
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Information Technology Services Agreement |
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Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
1.7. Reporting
Service level metrics will be reported weekly and monthly to UnitedHealth Group. The metrics reported are:
Production
%Total Available DRALPHA |
%Unisys Available DRALPHA |
|
%Total Available DRBRAVO |
%Unisys Available DRBRAVO |
|
%Total Available DRCHARLIE |
%Unisys Available DRCHARLIE |
|
%Total Available DRDELTA |
%Unisys Available DRDELTA |
|
%Total Available DRECHO |
%Unisys Available DRECHO |
|
%Total Available DRFOX |
%Unisys Available DRFOX |
|
%Total Available DRGAMMA |
%Unisys Available DRGAMMA |
|
%Total Available DRHALO |
%Unisys Available DRHALO |
|
%Total Available DRJAVA |
%Total Available DRJAVA |
|
%Total Available DRLIMA |
%Unisys Available DRLIMA |
|
%Total Available DRMICA |
%Unisys Available DRMICA |
|
%Total Available Overall |
%Unisys Available Overall |
1.8. Service Level Goal
Host |
Service Level Goal |
|||
Production, MNA17A |
%Unisys Available Overall | *** |
1.9. Accountability
Unisys will be accountable for the COSMOS On-line Database Availability Service Level Goal by database on a monthly basis.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 8 of 22
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Information Technology Services Agreement |
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Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
2. COSMOS ON-LINE TRANSACTION RESPONSE TIME
2.1. Purpose
The purpose is to measure and report the on-line internal response times for COSMOS transactions to UnitedHealth Group. The measurement will be used to evaluate Unisys performance against the service level.
2.2. Applicability
On-line internal response time for COSMOS transactions during normal operations.
2.3. Definitions
Internal Response Time | The elapsed time to process a measured COSMOS transaction internal to a specific ClearPath host. It starts at the time the transaction is put in the host COMS input queue and ends at the time the transaction is put in the COMS output queue. On-line response time is internal host response time only and does not include network response time to the end user. Host to host communication is not included in Internal Response Time. | |
A2A Response Time | A2A transactions are routed through MNA17A to a back-end host. A2A Response Time measures the Internal Response Time only on the destination back-end host as defined by Internal Response Time. The transaction time between MNA17A and the back-end host is not included in the measure. | |
U2A Response Time | A UNIX host to an ClearPath host initiates U2A transactions. U2A Response Time measures the Internal Response Time only on the destination ClearPath host as defined by Internal Response Time. The transaction time between the UNIX host and the ClearPath host is not included in the measure. | |
Normal Operation | All configured hardware and software components are available and functioning properly. Unisys is responsible for on-line response time during Available Periods of Normal Operation. | |
Selected Transactions. |
By Database EP400 CL601 F64 GI301 EP701 GI703 HO180 HO626 CL611
As agreed upon by UHG and Unisys the HO180 and HO626 transactions will be excluded from the DRMICA calculations. |
|
Workload Forecasts |
Unisys may be exempted from a Service Level Goal if the actual resource utilization exceeds the forecast resource utilization. Actual resource utilization must exceed the forecast by a sufficient magnitude to jeopardize Unisys ability to meet the Service Level Goal. A Service Level Goal may only be exempted with the concurrence of UHG Service Delivery Management and the Director of UHG Service Delivery which concurrence will not be unreasonably withheld.
Unisys may not be accountable for one individual service level due to workload growth issues but accountable for all other service levels. |
|
Degraded Response Time | UHG Availability Management and Unisys Service Delivery Management will identify whom Degraded Response Time events are attributed to. When a UHG application or procedural change degrades the performance of a transaction, that transaction will be removed from the response time calculation. | |
Service Level Goal | The Service Level Goal is the level of performance Unisys will strive to meet or exceed. |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 9 of 22
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Information Technology Services Agreement |
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Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
2.4. Keywords
UHG, SLA, COSMOS, CLEARPATH, RESPONSE TIME
2.5. Metrics
Overall response time for COSMOS databases collected and reported by Resource DB will continue. The metrics are:
%All DRALPHA |
%All DRBRAVO |
%All DRCHARLIE |
||
%All DRDELTA |
%All DRECHO |
%All DRFOX |
||
%All DRGAMMA |
%All DRHALO |
%All DRJAVA |
||
%All DRLIMA |
%All DRMICA |
The internal on-line response time will be measured for selected transactions for each of the COSMOS databases. The metrics are:
%Transactions DRALPHA |
%Transactions DRBRAVO |
%Transactions DRCHARLIE |
||
%Transactions DRDELTA |
%Transactions DRECHO |
%Transactions DRFOX |
||
%Transactions DRGAMMA |
%Transactions DRHALO |
%Transactions DRJAVA |
||
%Transactions DRLIMA |
%Transactions DRMICA |
2.6. Formula
%All <database> = As measured by Resource DB.
% Transaction <database> = # Selected Transactions <database> - GI703 transaction <database> £ Service Level Threshold / Total Transactions <database> * 100.
% Transaction <database> = GI703 transaction <database> £ Service Level Threshold / Total Transactions <database> * 100.
2.7. Reporting
Service level metrics will be reported monthly to UnitedHealth Group.
The following metrics will be reported as the percent of COSMOS transactions that met or exceeded the threshold. The metrics include:
%All DRALPHA |
%All DRBRAVO |
%All DRCHARLIE |
||
%All DRDELTA |
%All DRECHO |
%All DRFOX |
||
%All DRGAMMA |
%All DRHALO |
%All DRJAVA |
||
%All DRLIMA |
%All DRMICA |
The following metrics will be reported as the percent of COSMOS transactions that met or exceeded the service level threshold. The metrics include:
%Transactions DRALPHA |
%Transactions DRBRAVO |
%Transactions DRCHARLIE |
||
%Transactions DRDELTA |
%Transactions DRECHO |
%Transactions DRFOX |
||
%Transactions DRGAMMA |
%Transactions DRHALO |
%Transactions DRJAVA |
||
%Transactions DRLIMA |
%Transactions DRMICA |
|||
%All Transactions |
2.8. Service Level Goal
All Transactions as measured by Resource DB
% All Transactions ***
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 10 of 22
|
Information Technology Services Agreement |
|
||
Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
Critical Transactions minus GI703
%Transactions DRALPHA ***.
%Transactions DRBRAVO ***.
%Transactions DRCHARLIE ***.
%Transactions DRDELTA ***.
%Transactions DRECHO ***.
%Transactions DRFOX ***.
%Transactions DRGAMMA ***.
%Transactions DRHALO ***.
%Transactions DRJAVA ***.
%Transactions DRLIMA ***.
%Transactions DRMICA ***.
% All Transactions ***
GI703 Transaction
%Transactions DRALPHA ***.
%Transactions DRBRAVO ***.
%Transactions DRCHARLIE ***.
%Transactions DRDELTA ***.
%Transactions DRECHO ***.
%Transactions DRFOX ***.
%Transactions DRGAMMA ***.
%Transactions DRHALO ***.
%Transactions DRJAVA ***.
%Transactions DRLIMA ***.
%Transactions DRMICA ***
2.9. Accountability
Unisys is accountable for the COSMOS Internal On-line Response Time service levels by database on a monthly basis.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 11 of 22
|
Information Technology Services Agreement |
|
||
Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
3. SCHEDULE UPDATE FORMS
3.1. Purpose
The purpose is to measure and report the time to process a Schedule Update Form. This includes individual Schedule Update Forms and Schedule Update Form Projects. The measurement will be used to evaluate Unisys performance against the Service Level Goal.
3.2. Applicability
Schedule Update Form Processing.
3.3. Definitions
Schedule Update Form (SUF) | Requests to add change or delete a Batch Job that is managed by the Batch Scheduler. Schedule Update Forms are submitted by UHG personnel and processed by Unisys. The request is prepared on the Schedule Update form and is mailed or faxed to Unisys. | |
Batch Scheduler | A batch scheduling utility that automatically starts and manages batch jobs according to attributes assigned to a job. | |
Batch Job | A program or series of programs run under the control of a WFL program. | |
Days to Process an SUF | The time to process an SUF is from the date the SUF form is received to the date SUF is complete. | |
SUFs On Hold | SUFs waiting for action by the requester will not be included in the metric until work on the request can proceed. | |
SUF Projects |
SUF Projects are changes to the production batch schedule that require more effort and resource than a normal SUF. These SUFs will not be included in the metrics. SUF Projects include:
SUF forms with multiple change requests that exceed the effort of a normal SUF.
SUFs that involve a new program or process.
Planned projects that require changes to the batch schedule.
The Manager of UHG Production Support Services will identify which SUFs will be considered projects using the guidelines specified above. |
|
SUF Submission | SUFs may only be submitted by US Mail, UHG Unisys inter-company mail, through the designated web site, or by FAX to the Eagan Service Center Production Control FAX. This to ensure SUFs are properly received and logged for processing. Additional methods to submit SUFs may be implemented in the future. Unisys and UnitedHealth Group will mutually agree upon the submission methods. | |
Service Level Goal | The Service Level Goal is the level of performance Unisys will strive to meet or exceed. |
3.4. Keywords
SLA, SUF, SCHEDULE UPDATE FORM
3.5. Metrics
Days to process an SUF.
3.6. Formula
% SUFs = #SUFs Closed £ 8 business days / Total SUFs Closed * 100
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 12 of 22
|
Information Technology Services Agreement |
|
||
Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
3.7. Reporting
Service level metrics will be reported monthly to UnitedHealth Group. The metrics reported are the percent of Schedule Update Forms and the percent of Schedule Change Projects that met SUF Project date. The metric includes:
% SUFs
3.8. Service Level Goal
% SUFs ***
3.9. Accountability
Unisys will be accountable for the Schedule Update Form service levels on a monthly basis.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 13 of 22
|
Information Technology Services Agreement |
|
||
Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
4. INCIDENT MANAGEMENT
4.1. Purpose
The purpose is to measure and report the time it takes to resolve problems reported to Unisys. The measurement will be used to evaluate Unisys performance against the service level.
4.2. Scope
Reported Incident Management.
4.3. Definitions
Policy and Procedure | Unisys and UHG agree to respect the others Incident Management policy and procedure. | |
Trouble Ticket | The report of a problem to the ESC Helpdesk. Trouble Tickets are entered into, tracked by and reported by Remedy. Only Remedy Trouble Tickets are considered in this document. All Remedy tickets must have a partnering Peregrine ticket at UHG. |
Severity Level |
Definition |
Response Goal |
Recovery Goal |
|||
SEV 1 Severe | v An incident that severely impacts or has the potential to severely impact mission critical business operations, systems or components (Reference attached list) AND |
***
*** |
***
*** *** |
|||
v Affect total system access for more than *** internal users or has high visibility to external customers. | ||||||
SEV 2 Major |
v An Incident that significantly impacts or has the potential to significantly impact important business operations, systems or components (Reference attached list) AND |
***
*** |
***
*** *** |
|||
v Affects total system access for *** internal users or has moderate visibility to external customers. | ||||||
SEV 3 Moderate | v Incident impacts non-critical systems or components. | *** |
***
*** |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 14 of 22
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Information Technology Services Agreement |
|
||
Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
Severity Level |
Definition |
Response Goal |
Recovery Goal |
|||
v Affects total system access for less than *** internal users. | ||||||
V A hard down single desktop. | *** | *** | ||||
SEV 4 Minor | A single client issue | *** |
***
*** |
Resolved Trouble Ticket | The problem reported in the Trouble Ticket has been corrected, eliminated or otherwise appropriately addressed. Problems with planned and deferred resolutions may be closed and moved to a project list, action list or PPR for action. | |||
Invalid Tickets | Tickets that are incorrectly assigned to Unisys will be closed and returned to UHG. These tickets will not be counted in the service level metric. | |||
Escalation |
Differences between the UHG Service Center and the Eagan Service Center Helpdesk will be addressed jointly by:
|
|||
UnitedHealth Group Manager, Vendor Management Director, Vendor Management VP, Vendor Management |
Unisys Manager, ESC Helpdesk Program Manager, Service Delivery Management |
|||
Workload Forecasts | Unisys may be exempted from a Service Level Goal if the actual resource utilization exceeds the forecast resource utilization. Actual resource utilization must exceed the forecast by a sufficient magnitude to jeopardize Unisys ability to meet the Service Level Goal. A Service Level Goal may only be exempted with the concurrence of UHG Service Delivery Management and the Director of UHG Service Delivery which concurrence will not be unreasonably withheld. | |||
Ticket Volume |
The Incident Management SLA may be exempted for a day if the number of tickets received for a given day is *** above the daily average for the last *** months. Tickets opened that day will be excluded from the SLA calculation for that month.
The Manager of the UHG Service Center and the Manager of the ESC Helpdesk must agree the exemption is appropriate. |
|||
Service Level Goal | ***. |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 15 of 22
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Information Technology Services Agreement |
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Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
4.4. Keywords
PROBLEM, RESOLUTION, TICKET, SLA, RESPONSE
4.5. Metrics
Hours to Resolve Sev 1 Tickets
Hours to Resolve Sev 2 Tickets
Hours to Resolve Sev 3 Tickets
Hours to Resolve Sev 4 Tickets
Number of Invalid Tickets
Minutes to Respond to Sev1 Tickets
Hours to Respond to Sev2 Tickets
Hours to Respond to Sev3 Tickets
Hours to Respond to Sev4 Tickets
4.6. Formula
% Sev < x > Tickets Resolved = (# Sev < x > Tickets Resolved £ SLA Threshold, Sev < x > / Total # Sev < x > Tickets) * 100
% Sev < x > Tickets Responded = (# Sev < x > Tickets Responded £ SLA Threshold, Sev < x > / Total # Sev < x > Tickets) * 100
4.7. Reporting
Service level metrics will be reported monthly to UnitedHealth Group. The metric reported is the percent of Trouble Tickets Resolved that met or exceeded the SLA threshold. The metrics reported are:
% Sev 1 Tickets Resolved
% Sev 2 Tickets Resolved
% Sev 3 Tickets Resolved
% Sev 4 Tickets Resolved
Number of Invalid Tickets
Total Volume
% Sev 1 Tickets Responded
% Sev 2 Tickets Responded
% Sev 3 Tickets Responded
% Sev 4 Tickets Responded
4.8. Service Level Goal
% Sev 1 Tickets Resolved ***.
% Sev 2 Tickets Resolved ***.
% Sev 3 Tickets Resolved ***.
% Sev 4 Tickets Resolved ***.
% Sev 1 Tickets Responded ***.
% Sev 2 Tickets Responded ***.
% Sev 3 Tickets Responded ***.
% Sev 4 Tickets Responded ***.
4.9. Accountability
Unisys will be accountable for the service levels for Trouble Ticket response and resolution on a monthly basis.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 16 of 22
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Information Technology Services Agreement |
|
||
Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
5. COSMOS BATCH JOB COMPLETION
5.1. Purpose
The purpose is to measure and report Batch Job completion. The measurement will be used to evaluate Unisys performance against the service level.
5.2. Scope
This service level agreement addresses the timely completion of Critical Batch Jobs, Regular Batch Jobs, PDS Jobs and Special Run Requests.
5.3. Definitions
Batch Job | A program or series of programs run under the control of a WFL program. | |
Scheduled Batch Job | Any Batch Job that is set up in and started by the Batch Scheduler Utility. | |
Critical Batch Jobs |
These are specific Scheduled Batch Jobs whose prompt and proper execution is critical to UHG business. Critical Batch Jobs are explicitly listed. Critical Batch Jobs are completed on time when they complete successfully on or before the Expected Complete Time. |
|
Regular Batch Jobs | Regular Batch Jobs include all Scheduled Batch Jobs, which are not Critical Batch Jobs, PDS Jobs or SRQs. | |
Special Run Request (SRQ) |
This is an ad hoc Batch Job request submitted by an end user to run a program. The SRQ is submitted on the SRQ form by fax, mail or electronically. The SRQ is then prepared and run by Unisys. LAGs are considered SRQs for this document. Requests via PDS or other electronic media are not measured as SRQs.
The time to process an SRQ starts at 18:00 on the day the SRQ request is received at Production Scheduling and ends when the SRQ Job successfully runs. BLSCHED will record the start and completion date and time. SRQ requests, which are received by Production Scheduling prior to 14:00 CST, will be input into the system for processing that evening. |
|
Production Delivery System (PDS) |
PDS Jobs are ad hoc Batch Job requests initiated on-line by end users using the PDS system. These jobs are placed in the job queue at the time of the request and remain in the job queue until approximately 18:00 the same day.
The time to process a PDS Job starts at 18:00 on the day the PDS Job is submitted and ends when the PDS Job successfully runs. |
|
Exceptions | The service levels identified in this agreement can be exempted for a day with the concurrence of UHG Availability Management and Unisys Service Delivery Management which concurrence will not be unreasonably withheld. This will cause data collected for any or all of the SLA metrics to be discarded for that day. As a result, unexpected volumes of batch work can be excluded from the service level metric. This may include an unexpectedly high number of jobs to be run or a high number of transactions to be processed, either of which will cause any or all of the service levels to not be met. | |
Batch Schedule Day | A day for batch scheduling purposes starts at 0900 and ends at 0900 the following day. | |
Batch Schedule | The Batch Schedule consists of the dates, times and frequencies Scheduled Batch Jobs are run. The Batch Schedule is maintained by the Batch Scheduler Utility. | |
Batch Scheduler Utility | A batch scheduling utility that automatically starts and manages Batch Jobs according to attributes assigned to the Job. The Batch Scheduler Utility is the BLSCHED Manager utility. |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 17 of 22
|
Information Technology Services Agreement |
|
||
Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
Scheduled Job Start | The data and time the Batch Job is scheduled to start. | |
Workload Forecasts |
Unisys may be exempted from a Service Level Goal if the actual resource utilization exceeds the forecast resource utilization. Actual resource utilization must exceed the forecast by a sufficient magnitude to jeopardize Unisys ability to meet the Service Level Goal. A Service Level Goal may only be exempted with the concurrence of UHG Service Delivery Management and the Director of UHG Service Delivery which concurrence will not be unreasonably withheld.
Unisys may not be accountable for one individual service level due to workload growth issues but accountable for all other service levels. |
|
Service Level Goal | The Service Level Goal is the level of performance Unisys will strive to meet or exceed. | |
Scheduled Downtime | Unisys is not accountable for extended Batch Job Completion time during Scheduled Down Time. See service level agreement 1.0 COSMOS On-line Availability, Scheduled Downtime for the downtime schedule. | |
ASLE | Application Service Level Expectations document detailing the COSMOS critical and Regular batch job information by application. This list is maintained by UHG. The ASLE document is located on the UHG/UNISYS extranet website. | |
Service Level Expectation | The expected level of performance. However, it is not measured or reported as part of the Service Level of Agreement. |
5.4. Keywords
SLA, CRITICAL BATCH JOBS, REGULAR BATCH JOBS, SRQ, PDS
5.5. Metrics
Number of Critical Batch Jobs Completed
Number of Regular Batch Jobs Completed
5.6. Formula
% Critical Batch Jobs Completed = Number of Critical Batch Jobs Completed £ Expected Complete Time / Total Number of Critical Batch Jobs * 100
% Regular Batch Jobs Completed = Number of Regular Batch Jobs Completed £ Expected Complete Time/ Total Regular Batch Jobs * 100
5.7. Reporting
Service level metrics will be reported monthly to UnitedHealth Group. The metric reported is the percent of Batch Jobs completed within the service level. The metrics reported are:
% Critical Batch Jobs Completed
% Regular Batch Jobs Completed
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 18 of 22
Information Technology Services Agreement | ||||
Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
5.8 Service Level Expectation
SRQs completed ***.
PDS jobs completed ***.
The completion expectation time is provided the information from the end-user is accurate.
5.9 Service Level Goal
% Critical Batch Jobs Completed ***
% Regular Batch Jobs Completed ***
5.10 Accountability
Unisys will be accountable for the service levels for Critical Batch Jobs Completed on a monthly basis.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 19 of 22
Information Technology Services Agreement | ||||
Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
6 ASR PROCESSING
6.1. Purpose
The purpose is to measure and report the preparation of ASRs and Purchase Orders resulting from Requests for ASR. The measurement will be used to evaluate Unisys performance against the Service Level Goal.
6.2. Applicability
Request for ASR to Purchase Order process for the procurement of hardware or software.
6.3. Definitions
Request for ASR | Request for Additional Services. A request for service prepared by UHG and submitted to Unisys to provide additional services. | |
ASR | The ASR is prepared by Unisys to communicate to UHG a solution to meet the requirement documented in the Request for ASR. This includes a summary, a description of the solution and costs. The ASR will be presented to UHG no later than 3 workdays after receiving the Request for ASR. | |
Approved ASR | UHG has approved the ASR provided by Unisys to allow Unisys to acquire resources to complete the activity or project. | |
Purchase Order | The Purchase Order (PO) is the documentation for the approval to acquire materials, services and resources to implement the solution. The PO will be available to suppliers no later than 2 workdays after the ASR is approved by UHG. | |
ASR Process |
UHG prepares and submits the Request for ASR to Unisys.
Unisys reviews the Request for ASR and develops an ASR to meet the requirements in the Request for ASR.
Unisys presents the ASR to UHG.
UHG reviews the ASR and approves or rejects the ASR.
If the ASR is approved, Unisys will prepare and submit documentation to effect the Purchase Order.
The Purchase Order is created and provided to the supplier. |
|
Request for ASR to ASR | The number of workdays from the day the Request for ASR is submitted to Unisys to the day the ASR is presented to UHG. | |
Approved ASR to PO | The number of workdays from the day the ASR is approved by UHG to the day the Purchase Order is created and provided to the supplier. | |
ASR and PO Additional Information | Unisys is not accountable for time spent to obtain additional required information from UHG to prepare the ASR or the Purchase Order. | |
Service Level Expectation | The expected level of performance. However, it is not measured or reported as part of the Service Level of Agreement. |
6.4. Keywords
SLA, ASR, Purchase Order, Request for ASR
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 20 of 22
Information Technology Services Agreement | ||||
Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
6.5. Metrics
Request for ASR to ASR
Approved ASR to PO
6.6. Formula
% ASRs = The percent of ASRs delivered to UHG within 3 workdays of receiving the Request for ASR.
% POs = The percent of Purchase Orders created and provided to the supplier within 2 workdays of UHG approval of the ASR.
6.7. Reporting
Service level metrics will be reported monthly to UnitedHealth Group. The metrics reported are the percent of ASRs presented to UHG no later than *** workdays after receiving the Request for ASR and the percent of Purchase Orders created and provided to the supplier no later than *** workdays after UHG approval of the ASR.
The metric includes:
% ASRs
% POs
Total Volume
6.8. Service Level Expectation
% ASRs ***.
% POs ***.
6.9. Accountability
Unisys will be accountable for the ASR to Proposal and Proposal to PO Service Level Goals on a monthly basis.
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 21 of 22
Information Technology Services Agreement | ||||
Exhibit 26 | ||||
Performance Standards and Service Level Agreements | ||||
|
7. CONTACTS
Unisys Contacts |
UHG Contacts |
|
Manager, Production Control | Manager, Vendor Management | |
Manager, Technical Services` | Director, Vendor Management | |
Manager, Business Resumption Planning | Capacity Management | |
Network Support Specialist | Quality Assurance Supervisor | |
Technical Writer | Technical Writer |
8. CHANGE HISTORY
This paragraph states that should any changes be necessary during the life of this document, both Parties jointly agree to the following process. The SLA Committee will meet once every 90day period (or other such time as agreed upon by both Unisys and UnitedHealth Group) to oversee the performance of this agreement and to resolve any disputes that should arise during this time period. Should the disputes remain unresolved by the end of the meeting, another meeting will be held within 10 business days for further discussion .
Original Signed By: X Date: | ||
M. Iannaci, Program Manager, UNISYS | ||
X Date: | ||
J.Gasper, Director Strategic Partnership Relations, UnitedHealth Group |
*** | Represents text deleted pursuant to a confidentiality treatment request filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. |
Page 22 of 22
Information Technology Services Agreement
Exhibit 26A
Sample Performance Report
U n i s y s
1
UnitedHealth Group and Unisys
Monthly Operations Review Package
February, 2004
U n i s y s
2
Operations Review Meeting Agenda
I. Current Operations
A. Data Center Server Farm B. Managed Server Farm
C. Network Application Server Farm D. User Hours Lost All Environments
II. Appendix
U n i s y s
3
I. Current Operations
A. Data Center Server Farm
1. ClearPath (Cosmos)
a. Performance Information b. Business Segment Input c. Utilization d. Technology Plan Summary
B. Managed Server Farm
1. Performance Information
2. Network Backup Consumption
C. Network Application Server Farm
1. Performance Information
2. Network Backup Consumption
D. User Hours Lost All Environments
U n i s y s
4
ClearPath Performance Information
28 of 29 (25 ClearPath) Service Goals met in Jan, 2004
COSMOS had 99.99% availability for January, 2004
U n i s y s
5
ClearPath Performance Information
· On Thursday, 1/29/04 at 1345 UHSPRODD went down with a Domain 0 Keep Alive Power Supply failure. CE brought back the full configuration at 1405. The failed component was replace during an E Change at 02:00 on 1/30/04 (59 UHL).
· On Thursday, 2/12/04 at 0706 MNA17A databases Charlie, Delta, Halo began to queue. It has been determined that the queuing started at 06:59:52 and cleared at 07:32:54 when two programs, HO1200, were ds-ed with arrays. The program dumps have been analyzed. It isnt clear yet how the ds of the HO1200 caused the queuing to clear at 07:32:54. Analysis will continue. If the root cause cannot be determined from the data gathered, Unisys recommends that we take a Memory Dump the next time this problem reoccurs where it is apparent that the Securitydb in addition to the Doctor databases are queuing on MNA17A.
U n i s y s
6
ClearPath Performance Information
ClearPath Availability Control Chart
Availability LCL UCL Mean
U n i s y s
7
ClearPath Performance Information
ClearPath Host Response Time Control Chart
Response seconds
Mean
UCL
LCL
U n i s y s
8
ClearPath Capacity Utilization
Prime Time Utilization MNA17A Oct. 25, 2003 move Charlie from F to A.
PHOA HALO GBL MCP-A DISTA-A DELTA OTHER-A CHARLIE
U n i s y s
9
ClearPath Utilization
Prime Time Utilization GVPRODC
DELTA LIMA MICA MCP-C DISTA-C OTHER-C
U n i s y s
10
ClearPath Capacity Utilization
Prime Time Utilization UHSPRODD
ECHO JAVA MCP-D DISTA-D OTHER-D
U n i s y s
11
ClearPath Capacity Utilization
Prime Time Utilization UHSPRODE
FOX GAMMA INDIGO MCP-E DISTA-E OTHER-E ALPHA BRAVO
U n i s y s
12
ClearPath Capacity Utilization
Prime Time Utilization All COSMOS
Pct UTIL
SYS MIPS
INUSE MIPS
U n i s y s
13
ClearPath Capacity Utilization
UHG PRIME SHIFT CPU UTILIZATION
MNA17A
GVPRODC
UHSPRODD
UHSPRODE
U n i s y s
14
ClearPath Capacity Utilization
UHG Disk Usage (Max)
Actuals Through 01/04
MNA17A Max GVPRODC UHSPRODD Max UHSPRODE Max UHSPRODG Max
U n i s y s
15
ClearPath Technology Plan Summary
Upgrade the NTs on UHSPRODD (Jan 25) -Completed
Add CNA (ClearPath Network Appliance) to MNA17A (Jan 25) Completed
Update CIOM microcode on all hosts (Feb 14) -Completed
Install incremental changes to MCP on UHSPRODD (Feb 14)Completed
U n i s y s
16
MSF Performance Information
TSM had 100% availability for January, 2004
MacroSoft had 100% availability for January, 2004
U n i s y s
17
MSF Network Backup Consumption
TSM Audit Occupancy
Daily Backup GB
Archive GB
TOTAL GB
Linear (TOTAL GB)
U n i s y s
18
MSF Network Backup Consumption
· Open Slots / Used Slots for Unix environment:
· Available Cells 1465
· Data and Scratch Tapes 3573
· Total Available Slots in Library 5038
· Database Size:
· 45.38 GB
· Average Number of Migrations per day (using 30 day averages):
· Corporate Finance1.9
· Corporate HR1.1
· Corporate ITS- 2.2
· SCS Optum1.8
· SCS UBH0.68
· UHC Allina2.2
· UHC HCIS5.5
· UHC Sales2.1
· Uniprise2.8
· UHC Uwriting1.4
U n i s y s
19
NASF Performance Information
Executive Outage Summary
Duration
Business Function Application Date (minutes) Description
Cause: Traffic to the backend began queuing up and was not being passed to the backend due to the main interactive B2B
Production transmit channel PQENB2B.TO.MQEAPD1 having an incorrect transmit queue definition.
B2B 1/29 42 Resolution: To stop the channel, change the transmit channel to the correct queue and restart the channel.
Non-Production Cause:
Resolution:
U n i s y s
20
NASF Performance InformationAARP
January 2004
ITEM GOAL RESULT SLA MET
PRODUCTION
A1 LAN Availability 99.99% 100.00% YES
A2 SAN Availability 99.99% 100.00% YES
A3 Automatic notification of failed backup 99.99% 100.00% YES
within 20 min of failure
A4.0 During Prime hoursStart of system 99.99% **
file restores within 20 min of having all
requirements necessary to perform
restore.
A4.1 During Non-Prime hoursStart of 99.99% **
system file restores within 45 min of
having all requirements necessary to
perform restore.
A5 Mean time to repair Unisys supported 99.99% **
network, tape and disk equipment
within 48 hours (or 2 business days) of
failure identification
NON-PRODUCTION
B6 None n/a n/a n/a
** No items for this timeframe
U n i s y s
21
NASF Performance Information B2B
J a n u a ry 2 0 0 4
ITEM GOAL RESULT SLA MET
PRODUCTION
A 1 End-to-End Application Availability 99 .95% 9 9 .9 1 % NO
A 2 Application Availability n /a n /a n /a
A 3 Network Availability to Internet 99.99% 1 0 0 .0 0 % YES
Backbone
A 4 Production Environment Availability 99.99% 1 0 0 .0 0 % YES
A 5 Intra -NASF response time bench m a rk n o to o l N /A
NON -PRODUCTION
B 1 End-to-End Application Availability 9 9 .9 5 % 1 0 0 .0 0 % YES
B 2 A pplication Availability n /a n /a n /a
B 3 Network Availability to Internet 9 9 .9 9 % 1 0 0 .0 0 % Y E S
Backbone
B 4 Non -Production Environment Availability 9 9 .9 9 % 1 0 0 .0 0 % Y E S
B 5 Intra -NASF response tim e b e n c h m a rk n o to o l N /A
DISASTER RECOVERY
C 1 SRDF Data Replication 1 h o u r +
C 2 Recovery Time of disaste r 3 h o u rs **
INCIDENT MANAGEMENT
D 1 .0 Sev 1 Problem Resolution 9 9 .9 0 % 1 0 0 .0 0 % Y E S
D 1 .1 Sev 2 Problem Resolution 9 9 .9 0 % 1 0 0 .0 0 % Y E S
D 1 .2 Sev 3 Problem Resolution 9 9 .9 0 % 1 0 0 .0 0 % Y E S
D 1 .3 Sev 4 Problem Resolution 9 9 .9 0 % 1 0 0 .0 0 % Y E S
D 2 Time to return Redundant Components to Service 9 9 .0 0 % **
D 3 Fail-over Test Success 9 9 .0 0 % **
CHANGE MANAGEMENT
D 4 Compliance for Unisys Scheduled Event 1 0 0 .0 0 % 1 0 0 .0 0 % Y E S
D 5 Unisys changes executed successfully 9 9 .0 0 % 1 0 0 .0 0 % Y E S
D 6 Compliance to scheduled events 1 0 0 .0 0 % 1 0 0 .0 0 % Y E S
D 7 .1 ASR tu rn -around in 3 business days 9 5 .0 0 % n /a
D 7 .2 PO tu rn -around in 2 business days 9 5 .0 0 % **
SECURITY
D 8 ID Administration with in 24 hours 9 9 .0 0 % **
D 9 .0 Notification of Security AlertsLevel 1 Im m e d ia te n /a n /a
D 9 .1 Notification of Security AlertsLevel 2 2 4 h o u rs n /a n /a
D 9 .2 Notification of Security AlertsLevel 3 4 8 h o u rs n /a n /a
D 9 .3 Notification of Security AlertsLevel 4 O n c e a m o n th n /a n /a
D 9 .4 Notification of Security AlertsLevel 5 O n c e a m o n th n /a n /a
D 1 0 Notification of Vulnerabilities N e x t B u sin e ss D a y **
** No Items forth is time frame .
+ This item is being monitored, however the measuring tool is being refined
U n i s y s
22
NASF Performance Information B2C
January 2004
IT E M G O A L R E S U L T S L A M E T
PRODUCTION
A 1 End -to -End Application Availability 9 9 .9 5 % 1 0 0 .0 0 % Y E S
A 2 Application Availability n /a n /a n /a
A 3 Network Availability to In te rn e t 9 9 .9 9 % 1 0 0 .0 0 % Y E S
Backbone
A 4 Non -Production Environment Availability 9 9 .9 9 % 1 0 0 .0 0 % Y E S
A 5 Intra -N A S F response tim e b e n c h m a rk n o to o l N /A
NON -PRODUCTION
B 1 End -to -End Application Availability 9 9 .9 5 % 1 0 0 .0 0 % Y E S
B 2 Application Availability n /a n /a n /a
B 3 Network Availability to Internet 9 9 .9 9 % 1 0 0 .0 0 % Y E S
Backbone
B 4 Production Environment Availability 9 9 .9 9 % 1 0 0 .0 0 % Y E S
B 5 Intra NASF response tim e b e n c h m a rk n o to o l N /A
DISASTER RECOVERY
C 1 SRDF Data Replication 1 h o u r **
C 2 Recovery Time of disaste r 3 h o u rs **
INCIDENT MANAGEMENT
D 1 .0 Sev 1 Problem Resolution 9 9 .9 0 % 100 .00 % YES
D 1 .1 Sev 2 Problem Resolution 9 9 .9 0 % 100 .00 % YES
D 1 .2 Sev 3 Problem Resolution 9 9 .9 0 % 100 .00 % YES
D 1 .3 Sev 4 Problem Resolution 9 9 .9 0 % 100 .00 % YES
D 2 Time to return Redundant Components to Service 9 9 .0 0 % **
D 3 Fail-over Test Success 9 9 .0 0 % **
CHANGE MANAGEMENT
D 4 Compliance for Unisys Scheduled Event 1 0 0 .0 0 % 100 .00 % YES
D 5 Unisys changes executed successfully 9 9 .0 0 % 100 .00 % YES
D 6 Compliance to scheduled events 1 0 0 .0 0 % 100 .00 % YES
D 7 .1 A S R turn -around in 3 business days 9 5 .0 0 % n/a
D 7 .2 P O tu rn -around in 2 business days 9 5 .0 0 % **
S E C U R IT Y
D 8 ID Administration within 24 hours 9 9 .0 0 % **
D 9 .0 Notification of Security AlertsLeve l 1 Im m e d ia te n/a n/a
D 9 .1 Notification of Security AlertsLevel 2 2 4 h o u rs n/a n/a
D 9 .2 Notification of Security AlertsLevel 3 4 8 h o u rs n/a n/a
D 9 .3 Notification of Security AlertsLevel 4 O n c e a m o n th n/a n/a
D 9 .4 Notification of Security AlertsLevel 5 O n c e a m o n th n/a n/a
D 1 0 Notification of Vulnerabilities N e x t B u sin e ss **
D a y
Unisys ** No Items forth is time frame .
23
NASF Performance InformationPeopleSoft
January 2004
IT E M G O A L R E S U L T S L A M E T
PRODUCTION
A 1 E n d -to -E n d A p p lic a tio n A v a ila b ility 9 9 .9 5 % 1 0 0 .0 0 % Y E S
A 2 A p p lic a tio n A v a ila b ility n /a n /a n /a
A 3 N e tw o rk A v a ila b ility to In te rn e t 9 9 .9 9 % 1 0 0 .0 0 % Y E S
B a c k b o n e
A 4 P ro d u c tio n E n v iro n m e n t A v a ila b ility 9 9 .5 5 % 1 0 0 .0 0 % Y E S
A 5 In tra -N A S F re s p o n s e tim e b e n c h m a rk n o to o l N /A
N O N -P R O D U C TIO N
B 1 E n d -to -E n d A p p lic a tio n A v a ilability 9 9 .5 0 % 1 0 0 .0 0 % Y E S
B 2 A p p lic a tio n A v a ila b ility n /a n /a n /a
B 3 N e tw o rk A v a ila b ility to In ternet 9 9 .9 9 % 1 0 0 .0 0 % Y E S
B a c k b o n e
B 4 N o n -P ro d u c tio n E n v iro n m e nt Availa b ility 9 9 .5 5 % 1 0 0 .0 0 % Y E S
B 5 In tra -N A S F re s p o n s e tim e b e n c h m a rk n o to o l n /a
D IS A S T E R R E V O V ER Y
C 1 N o t A p p lic a b le n /a n /a n /a
INCIDENT MANAGEM ENT
D 1 .0 S e v 1 P ro b le m R e s o lu tion 9 9 .9 0 % 1 0 0 .0 0 % Y E S
D 1 .1 S e v 2 P ro b le m R e s o lu tio n 9 9 .9 0 % 1 0 0 .0 0 % Y E S
D 1 .2 S e v 3 P ro b le m R e s o lu tio n 9 9 .9 0 % 1 0 0 .0 0 % Y E S
D 1 .3 S e v 4 P ro b le m R e s o lu tio n 9 9 .9 0 % 1 0 0 .0 0 % Y E S
D 2 T im e to re tu rn R e d u n d a nt Compon e n ts 9 9 .0 0 % * *
to S e rv ic e
D 3 F a il-o v e r T e s t S u c c e s s 9 9 .0 0 % * *
C H A N G E M A N A G E M E N T
D 4 C o m p lia n c e f o r U n is y s S cheduled E v e n t 1 0 0 .0 0 % 1 0 0 .0 0 % Y E S
D 5 U n is y s c h a n g e s e x e c u te d succe ssfully 9 9 .0 0 % 1 0 0 .0 0 % Y E S
D 6 C o m p lia n c e to s c h e d u le d e v ents 1 0 0 .0 0 % 1 0 0 .0 0 % Y E S
D 7 .1 A S R tu rn -a ro u n d in 3 busine ss days 9 5 .0 0 % n /a
D 7 .2 P O tu rn -a ro u n d in 2 b u s in e s s d a y s 9 5 .0 0 % * *
S E C U R IT Y
D 8 ID A d m in is tra tio n w ith in 2 4 h o u rs 9 9 .0 0 % * *
D 9 .0 N o tif ic a tio n o f S e c u rity A le rts - L e v e l 1 Im m e d ia te n /a n /a
D 9 .1 N o tif ic a tio n o f S e c u rity A le rts - L e v e l 2 2 4 h o u rs n /a n /a
D 9 .2 N o tif ic a tio n o f S e c u rity A le rts - L e v e l 3 4 8 h o u rs n /a n /a
D 9 .3 N o tif ic a tio n o f S e c u rity A le rts - L e v e l 4 O n c e a m o n th n /a n /a
D 9 .4 N o tif ic a tio n o f S e c u rity A le rts - L e v e l 5 O n c e a m o n th n /a n /a
D 1 0 N o tif ic a tio n o f V u ln e ra b ilitie s N e x t B u s in e s s * *
D a y
A p p lic a tio n D e v e lo p m e n t R e q u e s ts
D 1 1 R e q u e s ts a c k n o w le d g e d w ith in 4 h o u rs 9 5 .0 0 % 1 0 0 .0 0 % Y E S
d u rin g n o rm a l b u s in e s s h o u rs
D 1 2 R e q u e s ts c o m p le te d c o rre c tly a n d 9 5 .0 0 % 1 0 0 .0 0 % Y E S
c o m p le te ly b y th e m u tu a lly a g re e d u p o n
d a te s w ith in 4 h o u rs d u rin g n o rm a l
b u s in e s s h o u rs
D 1 3 A c k n o w le d g e m e n t to c h a n g e s th a t h a v e 1 0 0 .0 0 % 1 0 0 .0 0 % Y E S
b e e n c o m p le te d b a c k to d e v e lo p m e n t
s ta f f .
Unisys
* * N o Ite m s f o r th is tim e f ra m e .
24
NASF Performance InformationTreasury
January 2004
IT EM G O AL RESULT SLA M ET
PRO DUCT IO N
A1 End-to-End Application Av ailability 99.50% 100.00% YES
A2 Application Av ailability n/a n/a n/a
A3 Network Av ailability to Internet 99.99% 100.00% YES
Backbone
A4 Production Env ironm ent Av ailability 99.55% 100.00% YES
A5 Intra-NASF response tim e benchm ark no tool n/a
NO N-PRO DUCT IO N
B1 End-to-End Application Av ailability 99.50% 100.00% YES
B2 Application Av ailability n/a n/a n/a
B3 Network Av ailability to Internet 99.99% 100.00% YES
Backbone
B4 Non-Production Env ironm ent Availabilit 99.55% 100.00% YES
B5 Intra-NASF response tim e benchm ark no tool N/A
DISAST ER RECO VERY
C1 Not Applicable n/a n/a n/a
INCIDENT M ANAG EMENT
D1.0 Sev 1 Problem Resolution 99.90% 100.00% YES
D1.1 Sev 2 Problem Resolution 99.90% 100.00% YES
D1.2 Sev 3 Problem Resolution 99.90% 100.00% YES
D1.3 Sev 4 Problem Resolution 99.90% 100.00% YES
D2 Tim e to return Redundant Components 99.00% **
to Serv ice
D3 Fail-ov er Test Success 99.00% **
CHANG E M ANAG EMENT
D4 Compliance for Unisys Scheduled Ev en 100.00% 100.00% YES
D5 Unisys changes executed successfully 99.00% 100.00% YES
D6 Com pliance to scheduled events 100.00% 100.00% YES
D7.1 ASR turn-around in 3 business days 95.00% n/a
D7.2 PO turn-around in 2 business days 95.00% **
SECURIT Y
D8 ID Adm inistration within 24 hours 99.00% **
D9.0 Notification of Security Alerts - Lev el 1 Im m ediate n/a n/a
D9.1 Notification of Security Alerts - Lev el 2 24 hours n/a n/a
D9.2 Notification of Security Alerts - Lev el 3 48 hours n/a n/a
D9.3 Notification of Security Alerts - Lev el 4 O nce a m onth n/a n/a
D9.4 Notification of Security Alerts - Lev el 5 O nce a m onth n/a n/a
D10 Notification of Vulnerabilities Next Business **
Day
U n i s y s ** No Item s for this tim efram e.
25
NASF Performance Information Shared Services
January 2004
IT EM G O AL R ESULT SLA M ET
P R O D U C T IO N
A 1 E nd-to-E nd A pplication A v ailability n/a n/a n/a
A 2 A pplication A v ailability n/a n/a n/a
A 3 N etwork A v ailability to Internet 99.99% 100.00% Y E S
B ackbone
A 4 P roduction E nv ironm ent A v ailability 99.99% 100.00% Y E S
A 5 Intra-N A S F response tim e benchm ark no tool N /A
N O N -P R O D U C T IO N
B 1 E nd-to-E nd A pplication A v ailability n/a n/a n/a
B 2 A pplication A v ailability n/a n/a n/a
B 3 N etwork A v ailability to Internet 99.99% 100.00% Y E S
B ackbone
B 4 N on-P roduction E nv ironm ent A v ailabilit 99.99% 100.00% Y E S
B 5 Intra-N A S F response tim e benchm ark no tool N /A
D IS AS T E R R E C O V E R Y
C 1 S R D F D ata R eplication 1 hour **
C 2 R ecov ery T im e of disaster 3 hours **
IN C ID E N T M AN AG EM EN T
D 1.0 S ev 1 P roblem R esolution 99.90% 100.00% Y E S
D 1.1 S ev 2 P roblem R esolution 99.90% 100.00% Y E S
D 1.2 S ev 3 P roblem R esolution 99.90% 100.00% Y E S
D 1.3 S ev 4 P roblem R esolution 99.90% 100.00% Y E S
D 2 T im e to return R edundant C om ponents to S erv ice 99.00% **
D 3 F ail-ov er T est S uccess 99.00% **
C H AN G E M AN AG EM EN T
D 4 C om pliance for U nisys S cheduled E v en 100.00% 100.00% Y E S
D 5 U nisys changes ex ecuted successfully 99.00% 100.00% Y E S
D 6 C om pliance to scheduled ev ents 100.00% 100.00% Y E S
D 7.1 A S R turn-around in 3 business days 95.00% n/a
D 7.2 P O turn-around in 2 business days 95.00% **
S E C U R IT Y
D 8 ID A dm inistration within 24 hours 99.00% **
D 9.0 N otification of S ecurity A lerts -Lev el 1 Im m ediate n/a n/a
D 9.1 N otification of S ecurity A lerts -Lev el 2 24 hours n/a n/a
D 9.2 N otification of S ecurity A lerts -Lev el 3 48 hours n/a n/a
D 9.3 N otification of S ecurity A lerts -Lev el 4 O nce a m onth n/a n/a
D 9.4 N otification of S ecurity A lerts -Lev el 5 O nce a m onth n/a n/a
D 10 N otification of V ulnerabilities N ex t B usiness **
D ay
U n i s y s ** N o Item s for this tim efram e.
26
NASF Performance InformationLAWW
January 2004
IT EM G O AL RESULT SLA M ET
PRO DUCT IO N
A1 End-to-End Application Availability 99.95% 100.00% YES
A2 Application Av ailability n/a n/a n/a
A3 Network Av ailability to Internet 99.99% 100.00% YES
Backbone
A4 Production Env ironm ent Availability 99.99% 100.00% YES
A5 Intra-NASF response time benchmark no tool N/A
NO N-PRO DUCT IO N
B1 End-to-End Application Availability 99.95% 100.00% YES
B2 Application Av ailability n/a n/a n/a
B3 Network Av ailability to Internet 99.99% 100.00% YES
Backbone
B4 Non-Production Env ironm ent Av ailability 99.99% 100.00% YES
B5 Intra-NASF response tim e benchm ark no tool N/A
DISAST ER RECO VERY
C1 SRDF Data Replication 1 hour **
C2 Recov ery Tim e of disaster 3 hours **
INCIDENT M ANAG EM ENT
D1.0 Sev 1 Problem Resolution 99.90% 100.00% YES
D1.1 Sev 2 Problem Resolution 99.90% 100.00% YES
D1.2 Sev 3 Problem Resolution 99.90% 100.00% YES
D1.3 Sev 4 Problem Resolution 99.90% 100.00% YES
D2 Tim e to return Redundant Com ponents to Serv ice 99.00% **
D3 Fail-ov er Test Success 99.00% **
CHANG E M ANAG EM ENT
D4 Com pliance for Unisys Scheduled Ev en 100.00% 100.00% YES
D5 Unisys changes executed successfully 99.00% 100.00% YES
D6 Com pliance to scheduled ev ents 100.00% 100.00% YES
D7.1 ASR turn-around in 3 business days 95.00% n/a
D7.2 PO turn-around in 2 business days 95.00% **
SECURITY
D8 ID Adm inistration within 24 hours 99.00% **
D9.0 Notification of Security Alerts -Lev el 1 Im m ediate n/a n/a
D9.1 Notification of Security Alerts -Lev el 2 24 hours n/a n/a
D9.2 Notification of Security Alerts -Lev el 3 48 hours n/a n/a
D9.3 Notification of Security Alerts -Lev el 4 O nce a m onth n/a n/a
D9.4 Notification of Security Alerts -Lev el 5 O nce a m onth n/a n/a
D10 Notification of Vulnerabilities Next Business **
Day
U n i s y s
** No Item s for this tim efram e.
27
NASF Performance InformationUBH
Jan u ary 2004
IT E M G O AL R E S U L T S L A M E T
P R O D U C T IO N
A 1 E nd-to-E nd A pplication A v ailability 99.95% 100.00% Y E S
A 2 A pplication A v ailability n/a n/a n/a
A 3 N etwork A v ailability to Internet 99.99% 100.00% Y E S
B ackbone
A 4 P roduction E nv ironm ent A v ailability 99.99% 100.00% Y E S
A 5 Intra-N A S F response tim e benchm ark no tool N /A
N O N -P R O D U C T IO N
B 1 E nd-to-E nd A pplication A v ailability 99.95% 100.00% Y E S
B 2 A pplication A v ailability n/a n/a n/a
B 3 N etwork A v ailability to Internet 99.99% 100.00% Y E S
B ackbone
B 4 N on-P roduction E nv ironm ent A v ailability 99.99% 100.00% Y E S
B 5 Intra-N A S F response tim e benchm ark no tool N /A
D IS AS T E R R E C O V E R Y
C 1 S R D F D ata R eplication 1 hour **
C 2 R ecov ery T im e of disaster 3 hours **
IN C ID E N T M AN AG E M E N T
D 1.0 S ev 1 P roblem R esolution 99.90% 100.00% Y E S
D 1.1 S ev 2 P roblem R esolution 99.90% 100.00% Y E S
D 1.2 S ev 3 P roblem R esolution 99.90% 100.00% Y E S
D 1.3 S ev 4 P roblem R esolution 99.90% 100.00% Y E S
D 2 T im e to return R edundant C om ponents to S erv ice 99.00% **
D 3 F ail-ov er T est S uccess 99.00% **
C H AN G E M AN AG E M E N T
D 4 C om pliance for U nisys S cheduled E v en 100.00% 100.00% Y E S
D 5 U nisys changes ex ecuted successfully 99.00% 100.00% Y E S
D 6 C om pliance to scheduled ev ents 100.00% 100.00% Y E S
D 7.1 A S R turn-around in 3 business days 95.00% n/a
D 7.2 P O turn-around in 2 business days 95.00% **
S E C U R IT Y
D 8 ID A dm inistration within 24 hours 99.00% **
D 9.0 N otification of S ecurity A lertsLev el 1 Im m ediate n/a n/a
D 9.1 N otification of S ecurity A lertsLev el 2 24 hours n/a n/a
D 9.2 N otification of S ecurity A lertsLev el 3 48 hours n/a n/a
D 9.3 N otification of S ecurity A lertsLev el 4 O nce a m onth n/a n/a
D 9.4 N otification of S ecurity A lertsLev el 5 O nce a m onth n/a n/a
D 10 N otification of V ulnerabilities N ex t B usiness **
D ay
U n i s y s ** N o Item s for this tim efram e.
28
NASF Performance InformationUeS
January 2004
IT EM G O AL R ESULT SLA M ET
PRO DUCT IO N
A 1 E nd-to-E nd A pplication A v ailability 99.95% 100.00% Y E S
A 2 A pplication A v ailability n/a n/a n/a
A 3 N etwork A v ailability to Internet 99.99% 100.00% Y E S
B ackbone
A 4 P roduction E nv ironm ent A v ailability 99.99% 100.00% Y E S
A 5 Intra-N A S F response tim e benchm ark no tool N /A
NO N-PRO DUCT IO N
B 1 E nd-to-E nd A pplication A v ailability 99.95% 100.00% Y E S
B 2 A pplication A v ailability n/a n/a n/a
B 3 N etwork A v ailability to Internet 99.99% 100.00% Y E S
B ackbone
B 4 N on-P roduction E nv ironm ent A v ailabilit 99.99% 100.00% Y E S
B 5 Intra-N A S F response tim e benchm ark no tool N /A
DISAST ER RECO VERY
C 1 S R D F D ata R eplication 1 hour **
C 2 R ecov ery T im e of disaster 3 hours **
INCIDENT M ANAG EM ENT
D 1.0 S ev 1 P roblem R esolution 99.90% 100.00% Y E S
D 1.1 S ev 2 P roblem R esolution 99.90% 100.00% Y E S
D 1.2 S ev 3 P roblem R esolution 99.90% 100.00% Y E S
D 1.3 S ev 4 P roblem R esolution 99.90% 100.00% Y E S
D 2 T im e to return R edundant C om ponents 99.00% **
to S erv ice
D 3 F ail-ov er T est S uccess 99.00% **
CHANG E M ANAG EM ENT
D 4 C om pliance for U nisys S cheduled E v en 100.00% 100.00% Y E S
D 5 U nisys changes executed successfully 99.00% 100.00% Y E S
D 6 C om pliance to scheduled ev ents 100.00% 100.00% Y E S
D 7.1 A S R turn-around in 3 business days 95.00% n/a
D 7.2 P O turn-around in 2 business days 95.00% **
SECURITY
D 8 ID A dm inistration within 24 hours 99.00% **
D 9.0 N otification of S ecurity A lerts -Lev el 1 Im m ediate n/a n/a
D 9.1 N otification of S ecurity A lerts -Lev el 2 24 hours n/a n/a
D 9.2 lerts - N otification of S ecurity A Lev el 3 48 hours n/a n/a
D 9.3 N otification of S ecurity A lerts -Lev el 4 O nce a m onth n/a n/a
D 9.4 N otification of S ecurity A lerts -Lev el 5 O nce a m onth n/a n/a
D 10 N otification of V ulnerabilities N ext B usiness **
D ay
** No Items for this time frame.
U n i s y s
29
NASF Performance InformationVETSS
Jan u ary 2004
IT E M G O AL R E S U L T S L A M E T
P R O D U C T IO N
A 1 E nd-to-E nd A pplication A v ailability 99.95% 100.00% Y E S
A 2 A pplication A v ailability n/a n/a n/a
A 3 N etwork A v ailability to Internet 99.99% 100.00% Y E S
B ackbone
A 4 P roduction E nv ironm ent A v ailability 99.99% 100.00% Y E S
A 5 Intra-N A S F response tim e benchm ark no tool N /A
N O N -P R O D U C T IO N
B 1 E nd-to-E nd A pplication A v ailability 99.95% 100.00% Y E S
B 2 A pplication A v ailability n/a n/a n/a
B 3 N etwork A v ailability to Internet 99.99% 100.00% Y E S
B ackbone
B 4 N on-P roduction E nv ironm ent A v ailabilit 99.99% 100.00% Y E S
B 5 Intra-N A S F response tim e benchm ark no tool N /A
D IS AS T E R R E C O V E R Y
C 1 S R D F D ata R eplication 1 hour **
C 2 R ecov ery T im e of disaster 3 hours **
IN C ID E N T M AN AG E M E N T
D 1.0 S ev 1 P roblem R esolution 99.90% 100.00% Y E S
D 1.1 S ev 2 P roblem R esolution 99.90% 100.00% Y E S
D 1.2 S ev 3 P roblem R esolution 99.90% 100.00% Y E S
D 1.3 S ev 4 P roblem R esolution 99.90% 100.00% Y E S
D 2 T im e to return R edundant C om ponents 99.00% **
to S erv ice
D 3 Fail-over Test Success 99.00% **
CHANGE MANAGEMENT
D 4 Compliance for Unisys Scheduled Even 100.00% 100.00% Y E S
D 5 Unisys changes executed successfully 99.00% 100.00% Y E S
D 6 Compliance to scheduled events 100.00% 100.00% Y E S
D 7.1 ASR turn-around in 3 business days 95.00% n/a n/a
D 7.2 PO turn-around in 2 business days 95.00% **
SECURITY
D 8 ID Administration within 24 hours 99.00% **
D 9.0 Notification of Security Alerts -Lev el 1 Im m ediate n/a n/a
D 9.1 Notification of Security Alerts -Lev el 2 24 hours n/a n/a
D 9.2 Notification of Security Alerts -Lev el 3 48 hours n/a n/a
D 9.3 Notification of Security Alerts -Lev el 4 O nce a m onth n/a n/a
D 9.4 Notification of Security Alerts -Lev el 5 O nce a m onth n/a n/a
D 10 Notification of Vulnerabilities N ex t B usiness **
D ay
** No Items for this time frame.
Unisys
30
NASF Network Backup Consumption
ESC Library Summary
FULL/UNUSABLE MEDIA: 492 (79.6%)
AVAILABLE MEDIA: 75 (12.1%)
EMPTY SLOTS: 51 ( 8.3%)
TOTAL: 618
Tapes onsite in excess to the library: 689
We are currently at (492+689)/618 = 191% capacity of the L700 in Eagan
SLC Library Summary
FULL/UNUSABLE MEDIA: 184 (48.0%)
AVAILABLE MEDIA: 41 (10.7%)
EMPTY SLOTS: 158 (41.3%)
TOTAL: 383
U n i s y s
31
User Hours Lost All Environments
User Hours Lost
hours lost
LCL
UCL
Mean
U n i s y s
32
II. Appendix
A. Data Center Server Farm
1. SLA Detail
2. ClearPath (Cosmos)
a. October Disaster Recovery Test
U n i s y s
33
SLA DetailDCSF
January 2004
ITEM GOAL RESULT SLA MET
1) ClearPath Availability 99.70% 99.99% YES
2) ClearPath Response Time Average < .5 sec 0.09 YES
3) ClearPath SCRs 96.00% 100.00% YES
4) ClearPath Critical Batch Jobs 99.20% N/A N/A*
5) ClearPath Critical Trans. DRALPHA 90.00% 93.72% YES
6) ClearPath Critical Trans.DRBRAVO 90.00% 97.66% YES
7) ClearPath Critical Trans. DRCHARLIE 90.00% 96.25% YES
8) ClearPath Critical Trans. DRDELTA 90.00% 96.33% YES
9) ClearPath Critical Trans. DRECHO 90.00% 91.99% YES
10) ClearPath Critical Trans. DRFOX 90.00% 97.97% YES
11) ClearPath Critical Trans. DRGAMMA 90.00% 97.48% YES
12) ClearPath Critical Trans. DRHALO 90.00% 96.09% YES
13) ClearPath Critical Trans. DRJAVA 90.00% 96.23% YES
14) ClearPath Critical Trans. DRLIMA 90.00% 94.78% YES
15) ClearPath Critical Trans. DRMICA 90.00% 88.05% NO
16) ClearPath GI703 Trans. DRALPHA 70.00% 97.39% YES
17) ClearPath GI703 Trans.DRBRAVO 70.00% 98.01% YES
18) ClearPath GI703 Trans. DRCHARLIE 70.00% 98.41% YES
19) ClearPath GI703 Trans. DRDELTA 70.00% 99.13% YES
20) ClearPath GI703 Trans. DRECHO 70.00% 98.31% YES
21) ClearPath GI703 Trans. DRFOX 70.00% 98.76% YES
22) ClearPath GI703 Trans. DRGAMMA 70.00% 98.46% YES
23) ClearPath GI703 Trans. DRHALO 70.00% 98.18% YES
24) ClearPath GI703 Trans. DRJAVA 70.00% 97.44% YES
25) ClearPath GI703 Trans. DRLIMA 70.00% 98.89% YES
26) ClearPath GI703 Trans. DRMICA 70.00% 98.49% YES
27 Sev 1 Problem Resolution 96.00% 100.00% YES
28 Sev 2 Problem Resolution 92.00% 100.00% YES
29 Sev 3 Problem Resolution 96.00% 100.00% YES
30 Sev 4 Problem Resolution 96.00% 100.00% YES
* Source data from UHG not available for January
U n i s y s
34
April Disaster Recovery Test
Management Status
RFS Business Due UHG
ASR Unit Project Name Date Overall Scope Schedule Team Issue Approved
N/A N/A Apr-04 Disaster 4/21/04 Green Green Green Green Green N/A
Recovery Test
Sponsor: N/A
UHG PM: Ron Bakowski / Linda Cote
Unisys PM: Rich Moore
Scope: Conduct a disaster recovery exercise from April 21 through April 24, 2004.
Proposed applications include COSMOS, CPW, and QStar.
Previous Milestone:
Next Milestone: Planning phase to start first week in March.
Discussion Items: N/A
U n i s y s
35
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Information Technology Services Agreement |
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Exhibit 26B | ||||
List of UHS Service Level Agreements | ||||
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2004 Contract Exhibit Note
This exhibit was considered to be part of the initial COSMOS transition of services to Unisys, and has been intentionally deleted by both parties for the contract extension.
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Information Technology Services Agreement |
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Exhibit 26C | ||||
Service Management Targets | ||||
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2004 Contract Exhibit Note
This exhibit was considered to be part of the initial COSMOS transition of services to Unisys, and has been intentionally deleted by both parties for the contract extension.
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Information Technology Services Agreement |
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Exhibit 27 | ||||
U.S. Government Contracting Requirements | ||||
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EQUAL EMPLOYMENT OPPORTUNITY . Unisys agrees that Unisys will not discriminate against any employee or applicant for employment because of race, color, religion, sex or national origin; and that Unisys will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin. Without limiting the foregoing, Unisys agrees to and shall be bound by the provisions of the equal opportunity clause set forth at 41 CFR 60-1.4, which is incorporated by reference.
CERTIFICATION OF NONSEGREGATED FACILITIES . Unisys agrees as follows:
Unisys certifies that it does not and will not maintain or provide for its employees any segregated facilities at any of its establishments, and that it does not and will not permit its employees to perform their services at any location under its control where segregated facilities are maintained. Unisys agrees that a breach of this certification is a violation of the Equal Opportunity clause required by Executive Order 11246 of September 24, 1965. As used in this certification, the term segregated facilities means any waiting rooms, work areas, rest rooms and wash rooms, restaurants and other eating areas, time clocks, locker rooms and other storage or dressing areas, parking lots, drinking fountains, recreation or entertainment areas, transportation, and housing facilities provided for employees which are segregated by explicit directive or are in fact segregated on the basis of race, color, religion, or national origin because of habit, local custom, or otherwise.
Unisys further agrees that (except where it has obtained identical certifications from proposed subcontractors for specific time periods) it will obtain identical certifications from proposed subcontractors prior to the award of subcontracts exceeding $10,000 which are not exempt from the provisions of the Equal Opportunity Clause; that it will forward the following notice to such proposed subcontractors (except where the proposed subcontractors have submitted identical certifications for specific time periods):
Notice to Prospective Subcontractors of Requirement
For Certifications of Nonsegregated Facilities
A Certification of Nonsegregated Facilities, as required by the May 21, 1968, order on Elimination of Segregated Facilities, by the Secretary of Labor (33 Fed. Reg. 7804, May 28, 1968), must be submitted prior to the award of a subcontract exceeding $10,000 which is not exempt from the provisions of the Equal Opportunity Clause. The certification may be submitted either for each subcontract or for all subcontracts during a period (i.e., quarterly, semi-annually, or annually).
NOTE: The penalty for making false statements in offers is prescribed in 18 U.S.C. Section 1001.
AFFIRMATIVE ACTION COMPLIANCE PROGRAM . Unisys will develop a written Affirmative Action Compliance Program for each of its establishments consistent with the rules and regulations of the Department of Labor at 41 CFR 60-1 and 60-2, as such rules and regulations may be amended from time to time.
EQUAL EMPLOYMENT OPPORTUNITY REPORTING REQUIREMENTS . Unisys will complete and file Government Standard Form 100, Equal Employment Opportunity Employer Information Report EEO-1, in accordance with the instructions contained therein.
EQUAL EMPLOYMENT OPPORTUNITY - VETERANS . Unisys agrees to take affirmative action to employ and advance in employment qualified disabled veterans and veterans of the Vietnam era consistent with the rules and regulations of the Department of Labor at 41 CFR 60-250.4, as such rules and regulations may be amended from time to time. Without limiting the foregoing, Unisys agrees to and shall be bound by the provisions of the affirmative action clause set forth at 41 CFR 60-250.4, which is incorporated by reference.
EQUAL EMPLOYMENT OPPORTUNITY - HANDICAPPED . Unisys agrees to take affirmative action to employ, advance in employment, and otherwise treat qualified handicapped individuals without discrimination consistent with
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Information Technology Services Agreement |
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Exhibit 27 | ||||
U.S. Government Contracting Requirements | ||||
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the rules and regulations of the Department of Labor at 41 CFR 60-741, as such rules and regulations may be amended from time to time. Without limiting the foregoing, Unisys agrees to and shall be bound by the provisions of the affirmative action clause set forth at 41 CFR 60-741.4, which is incorporated by reference.
EXAMINATION OF RECORDS . Unisys agrees that the Controller General of the UHS States or a duly authorized representative of the General Accounting Office shall have access to, and the right to examine books, documents, papers or other records pertaining to such contracts or purchase order(s).
Unisys will furnish all information and reports required by Executive Order No. 11246, as amended, and by the rules and regulations promulgated thereunder, and will permit access to its books, records and accounts by the contracting agency and the Secretary of Labor for purposes of investigating compliance with such rules and regulations.
CLEAN AIR AND WATER . Unisys certifies as follows:
(a) | No facility to be utilized in the performance of its contracts with UHS has been listed on the Environmental Protection Agency List of Violating Facilities for one or more violations of the Clean Air Act (42 U.S.C. 7401 et seq .) or the Clean Water Act (33 U.S.C. 1251 et seq .). |
(b) | Unisys will promptly notify UHS of the receipt of any communication from the Director, Office of Federal Activities, Environmental Protection Agency, indicating that any facility which Unisys proposes to use for the performance of its contracts with UHS is under consideration to be listed on the EPA list of Violating Facilities. |
(c) | Unisys will include substantially this certification, including this paragraph (c), in every nonexempt subcontract. |
UTILIZATION OF SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS CONCERNS . Unisys understands that it is the policy of the UHS States that small business and small business concerns owned and controlled by socially and economically disadvantaged individuals shall have the maximum practicable opportunity to participate in the performance of contracts let by any Federal agency.
Unisys hereby agrees to carry out this policy in the awarding of subcontracts to the fullest extent consistent with the efficient performance of its contracts with UHS. Unisys further agrees to cooperate in any studies or surveys as may be conducted by the UHS States Small Business Administration or the awarding agency of the UHS States as may be necessary to determine the extent of Unisyss compliance with this clause.
The term small business concern shall mean a small business as defined pursuant to Section 3 of the Small Business Act and relevant regulations promulgated under that Act. The term small business concern owned and controlled by socially and economically disadvantaged individuals shall mean a small business concern-
(a) | which is at least 51 per centum owned by one or more socially and economically disadvantaged individuals; or, in the case of any publicly owned business, at least 51 per centum of the stock of which is owned by one or more socially and economically disadvantaged individuals; and |
(b) | whose management and daily business operations are controlled by one or more of such individuals. The contractor shall presume that socially and economically disadvantaged individuals include Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, and other minorities, or any other individuals found to be disadvantaged by the Small Business Administration pursuant to Section 8(a) of the Small Business Act. |
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Information Technology Services Agreement |
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Exhibit 27 | ||||
U.S. Government Contracting Requirements | ||||
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Unisys acting in good faith may rely on written representations by its subcontractors regarding their status as either a small business concern or a small business concern owned and controlled by socially and economically disadvantaged individuals.
Unisys agrees to adopt and comply with a small business and small disadvantaged business subcontracting plan containing all the terms and provisions required of such plans by the Small Business Act, as amended, and all pertinent regulations promulgated under that Act.
CERTIFICATION AND DISCLOSURE REGARDING PAYMENTS TO INFLUENCE CERTAIN FEDERAL TRANSACTIONS . Unisys certifies to the best of its knowledge and belief on or after December 23, 1989, that:
(a) | No Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a member of Congress on his or her behalf in connection with the awarding of any Federal grant, the making of any Federal grant, the making of any Federal ban, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment or modification of any Federal continuation, renewal, amendment. |
(b) | If any funds other than Federal appropriated funds (including profit or fee received under a covered Federal transaction) have been paid, or will be paid, to any person for influencing or attempting to influence an officer or employee of any agency, a member of Congress, an officer or employee of Congress, or an employee of a Member of Congress on his or her behalf in connection with any solicitation of the Federal government, the Unisys shall complete and submit, with its offer, OBM Standard Form LLL, Disclosure of Lobbying Activities, to the contracting officers. |
(c) | The definitions and prohibitions contained in FAR 52.203-12 are hereby incorporated by reference in this certification. |
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Information Technology Services Agreement |
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Exhibit 28 | ||||
Transitioned Employee Letter Agreement | ||||
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2004 Contract Exhibit Note
This Exhibit was considered to be part of the initial COSMOS transition of services to Unisys, and has been intentionally deleted by both Parties for the contract extension.
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Information Technology Services Agreement |
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Exhibit 29 | ||||
UHS Employee List | ||||
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2004 Contract Exhibit Note
This exhibit was considered to be part of the initial COSMOS transition of services to Unisys, and has been intentionally deleted by both parties for the contract extension.
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Information Technology Services Agreement |
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Exhibit 30 | ||||
COLA | ||||
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2004 Contract Exhibit Note
This Exhibit has been intentionally deleted by both Parties for the contract extension.
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Information Technology Services Agreement |
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Exhibit 31 | ||||
Variable Pricing Mechanism | ||||
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2004 Contract Exhibit Note
This exhibit has been intentionally deleted by both Parties for the contract extension.
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Information Technology Services Agreement |
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Exhibit 32 | ||||
Information Security Policies and Procedures | ||||
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2004 Contract Exhibit Note
Pursuant to Unisys obligation to provide security in accordance with UHS policies and procedures, from time to time during the Term UHS shall provide Unisys the most current UHS information security policies and procedures, which policies and procedures shall be deemed incorporated by reference in this Exhibit.
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Information Technology Services Agreement |
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Exhibit 33 | ||||
COSMOS ASRs | ||||
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1.0 | Introduction |
1.1 | This Exhibit 33 describes the duties and responsibilities of Unisys and UHS related to Unisys provision of the Services related to the COSMOS ASRs (the COSMOS ASR Services). Unisys will provide the COSMOS ASR Services in accordance with the provisions of this Exhibit and the descriptions set forth in the applicable COSMOS ASRs. UHS will support Unisys provision of the COSMOS ASR Services in accordance with the descriptions contained in the applicable COSMOS ASRs. |
1.2 | Capitalized terms used in this Exhibit and not defined herein shall have the meanings given in the Agreement. |
2.0 | COSMOS ASR Services |
2.1 | The Parties have agreed that the COSMOS ASR Services shall consist of the Services provided by Unisys under each of the COSMOS ASRs listed in this Exhibit 33. The COSMOS ASRs are hereby incorporated by reference into the Agreement, with copies of such ASRs attached hereto. As of the Commencement Date of Amendment 4, Unisys shall continue to provide the COSMOS ASR Services as part of the Services. |
2.2 | To the extent that terms and conditions of this Exhibit 33 or the Agreement are inconsistent with the provisions of any COSMOS ASR, the applicable terms and conditions of this Exhibit 33 and the Agreement shall supersede the conflicting or inconsistent provisions of the applicable COSMOS ASR. |
2.3 | COSMOS ASRs: |
ASR # |
Description |
Start Date
|
Expiry
Month |
Comment |
||||
9724 rev. 2 |
Response Time Logger RTL | 6/1/1998 | 5/1 | Automatic renewal every June for 12 months | ||||
9872A |
Security Statement of Work | 6/1/1999 | 10/1/2005 | |||||
9962B |
Enhanced test environment | 6/1/2003 | 10/1/2005 | |||||
03144 |
Cobol 85 License for MNA17B | 8/1/2003 | 10/1/2005 | |||||
03158 |
Monitor COSMOS transaction G12710 | 9/1/2003 | 10/1/2005 |
Develop SMTP traps to monitor COSMOS |
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03192 |
Added processors MNA17A and UHSPRODE | 2/6/2004 | Activate additional processors based on load demand |
All charges and fees under the COSMOS ASRs (except for 9962B) are included in the Base Charges. The fees for ASR 9962B are not included in the Base Charges and will be determined in accordance with the provisions of ASR 9962B.
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Information Technology Services Agreement |
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Exhibit 34 | ||||
Revision Log Template | ||||
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Revision to Exhibit
Modifications to this exhibit must be mutually accepted and approved in writing by UHS and UNISYS. The template shown below (example shown for clarity) may be customized as appropriate for a given exhibit.
Date |
Revision
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Description |
Responsible |
|||
7/5/00 |
3.3 | AR:M On-Line Availability Modifications. | Mark Iannaci |
Approved By:
X Date: | X Date: | |||
K. Hadzinski, Contract Manager, UNISYS |
J.Gasper, Director Strategic Partnership Relations, UHS |
Date |
Revision
|
Description |
Responsible |
|||
Approved By:
X Date: | X Date: | |||
K. Hadzinski, Contract Manager, UNISYS |
J.Gasper, Director Strategic Partnership Relations, U |
Date |
Revision
|
Description |
Responsible |
|||
Approved By:
X Date: | X Date: | |||
K. Hadzinski, Contract Manager, UNISYS |
J.Gasper, Director Strategic Partnership Relations, U |
Date |
Revision
|
Description |
Responsible |
|||
Approved By:
X Date: | X Date: | |||
K. Hadzinski, Contract Manager, UNISYS |
J.Gasper, Director Strategic Partnership Relations, U |
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Information Technology Services Agreement |
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Exhibit 35 | ||||
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Master Preferred Agreement
Master Preferred offers the flexibility of a modifiable contract combined with a high level of protection for both the depositor and the beneficiary. It allows for additional parties to accept contract conditions with a one-page addendum. It provides frequent correspondence between DSI and all parties to the agreement. The depositor and beneficiary will receive signed confirmations from DSI that every deposit has been inspected; an account history report to notify them of the status of the escrow; and ongoing monitoring services to ensure compliance of contract terms.
Purpose
DSIs Master Preferred Agreement is generally used when:
| Both parties agree that a high level of escrow protection is needed. |
| The depositor or the beneficiary wants to establish an escrow contract that is executed once, defining the companys preferred terms. |
| The depositor has multiple products to be licensed independently by various beneficiaries. |
| Both parties want to reduce the time spent on negotiating the basic terms and conditions of the escrow agreement. |
| Clients want to avoid setup costs when adding beneficiaries or depositors to their escrow account. |
Features
Master Preferred customers benefit from these unique features:
| One agreement ensures consistency for all escrow requirements. |
| Additional parties accept contract conditions with a one-page form. |
| Tailored release conditions. |
| Modification of terms for unique requirements. |
| Written notification detailing the contents of the initial deposit and each update. |
| Semiannual account histories listing all deposit activity. |
| DSI direct billing to beneficiary. |
| Technical verification options. |
| Audit trail of deposit created through inspection, date stamping of all deposit materials. |
| Deposit inspection with signed receipt for all parties. |
Atlanta Boston Chicago Dallas San Diego San Francisco
For More Information Call: (800) 962-0652 or Visit Us At www.dsiescrow.com or www.ironmountain.com
Page 1 of 17
MASTER PREFERRED ESCROW AGREEMENT
Depositor Company Number _2114129
This agreement (Agreement) is effective , 2003 among DSI Technology Escrow Services, Inc. (DSI), Unisys Corporation (Depositor) and any additional party signing the Acceptance Form attached to this Agreement (Preferred Beneficiary), who collectively may be referred to in this Agreement as the parties (Parties).
A. Depositor (either directly or through its subsidiaries) and Preferred Beneficiary have entered or will enter into a license agreement, development agreement, and/or other agreement regarding certain proprietary technology of Depositor (referred to in this Agreement as the License Agreement).
B. Depositor desires to avoid disclosure of its proprietary technology except under certain limited circumstances.
C. The availability of the proprietary technology of Depositor is critical to Preferred Beneficiary in the conduct of its business and, therefore, Preferred Beneficiary needs access to the proprietary technology under certain limited circumstances.
D. Depositor and Preferred Beneficiary desire to establish an escrow with DSI to provide for the retention, administration and controlled access of the proprietary technology materials of Depositor.
E. The parties desire this Agreement to be supplementary to the License Agreement pursuant to 11 United States [Bankruptcy] Code, Section 365(n).
ARTICLE 1 DEPOSITS
1.1 Obligation to Make Deposit . Upon the signing of this Agreement by the parties, including the signing of the Acceptance Form, and Exhibit D naming the Initial Account, Depositor shall deliver to DSI the proprietary technology and other materials (Deposit Materials) required to be deposited by the License Agreement or, if the License Agreement does not identify the materials to be deposited with DSI, then such materials will be identified on Exhibit A. If Exhibit A is applicable, it is to be prepared and signed by Depositor and Preferred Beneficiary. DSI shall have no obligation to either party with respect to the preparation, accuracy, execution, signing, delivery or validity of Exhibit A.
1.2 Identification of Tangible Media . Prior to the delivery of the Deposit Materials to DSI, Depositor shall conspicuously label for identification each document, magnetic tape, disk, or other media upon which the Deposit Materials are written or stored. Additionally, Depositor shall complete Exhibit B to this Agreement by listing each such media by the item label description, the type of media and the quantity. Exhibit B shall be signed by Depositor and
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delivered to DSI with the Deposit Materials. Unless and until Depositor makes the initial deposit with DSI, DSI shall have no obligation with respect to this Agreement, except the obligation to notify the parties regarding the status of the account as required in Section 2.2 below.
1.3. Escrow Account Name Identification . At the time of execution of this agreement, or when Depositor makes the initial deposit with DSI in accordance with Section 1.2 above, Depositor shall complete and sign Exhibit D naming the initial account upon which the Deposit Materials are written or stored. Any new deposits referencing new account names made subsequent to the signing of this Agreement, intended by the Depositor to be held in a separate account and maintained separately from the initial account, but made a part of this Agreement, shall be referenced by the Depositor on Exhibit E, and Exhibit E which shall be signed by the Depositor and DSI.
1.4 Acceptance of Deposit . When DSI receives the Deposit Materials and Exhibit B, DSI will conduct a visual deposit inspection. At completion of the deposit inspection, if DSI determines that the labeling of the media matches the item descriptions and quantity on Exhibit B, DSI will date and sign Exhibit B and mail a copy thereof to Depositor and Preferred Beneficiary. If DSI determines that the labeling does not match the item descriptions or quantity on Exhibit B, DSI will (a) note the discrepancies in writing on Exhibit B; (b) date and sign Exhibit B with the exceptions noted; and (c) mail a copy of Exhibit B to Depositor and Preferred Beneficiary. DSIs acceptance of the deposit occurs upon the signing of Exhibit B by DSI. Delivery of the signed Exhibit B to Preferred Beneficiary is Preferred Beneficiarys notice that the Deposit Materials have been received and accepted by DSI. OTHER THAN DSIS INSPECTION OF THE DEPOSIT MATERIALS, AS DESCRIBED ABOVE, DSI SHALL HAVE NO OBLIGATION REGARDING THE ACCURACY, COMPLETENESS, FUNCTIONALITY, PERFORMANCE OR NON-PERFORMANCE OF THE DEPOSIT MATERIALS.
1.5 Depositors Representations . During the term of this Agreement, Depositor represents as follows:
a. | Depositor lawfully possesses all of the Deposit Materials deposited with DSI; |
b. | With respect to all of the Deposit Materials and any materials provided solely for verification, pursuant to Section 1.6 of the Agreement (Test Materials) Depositor has the right and authority to grant to DSI and Preferred Beneficiary the rights as provided in this Agreement, provided further that DSIs or its independent contractors use of any Deposit Materials or Test Materials, pursuant to Section 1.6 of this Agreement, is lawful and does not violate the rights of any third parties; |
c. | As of the effective date of this Agreement, the Deposit Materials are not the subject of any liens or encumbrances, however, any liens or encumbrances made after the execution of this Agreement will not prohibit, limit, or alter the rights and obligations of DSI under this Agreement; |
d. | The Deposit Materials consist of the proprietary technology and other materials identified either in the License Agreement, Exhibit A, or Exhibit B, as the case may be; and |
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e. | The Deposit Materials are readable and useable in their current form or, if any portion of the Deposit Materials is encrypted, the decryption tools and decryption keys have also been deposited. |
1.6 Available Verification Services . Upon receipt of a written request from Preferred Beneficiary, DSI and Preferred Beneficiary may enter into a separate proposal agreement (Statement of Work) pursuant to which DSI will agree, upon certain terms and conditions, to inspect the Deposit Materials consistent with one or several of the levels of verification described in the attached Technical Verification Options. Depositor consents to DSIs performance of any level(s) of verification described in the attached Technical Verification Options. Depositor shall reasonably cooperate with DSI by providing its facilities, computer software systems, and technical and support personnel for verification whenever reasonably necessary. If a verification is elected after the Deposit Materials have been delivered to DSI, then only DSI, or at DSIs election, an independent contractor or company selected by DSI may perform the verification.
1.7 Deposit Updates . Unless otherwise provided by the License Agreement, Depositor shall update the Deposit Materials within sixty (60) days of each release of a new version of the product, which is subject to the License Agreement. Such updates will be added to the existing deposit. All deposit updates shall be listed on a new Exhibit B and Depositor shall sign the new Exhibit B. Each Exhibit B will be held and maintained separately within the escrow account. An independent record will be created which will document the activity for each Exhibit B. Any deposit updates shall be held in accordance with Sections 1.2 through 1.5 above. All references in this Agreement to the Deposit Materials shall include the initial Deposit Materials and any updates.
1.8 Removal of Deposit Materials . The Deposit Materials may be removed and/or exchanged only on written instructions signed by Depositor and Preferred Beneficiary, or as otherwise provided in this Agreement.
ARTICLE 2 CONFIDENTIALITY AND RECORD KEEPING
2.1 Confidentiality . DSI shall have the obligation to reasonably protect the confidentiality of the Deposit Materials. Except as provided in this Agreement or any subsequent agreement between the Parties, including without limitation Section 1.6, DSI shall not disclose, transfer, make available, or use the Deposit Materials. DSI shall not disclose the terms of this Agreement to any third party. If DSI receives a subpoena or any other order from a court or other judicial tribunal pertaining to the disclosure or release of the Deposit Materials, DSI will immediately notify the parties to this Agreement unless prohibited by law. It shall be the responsibility of Depositor and/or Preferred Beneficiary to challenge any such order; provided, however, that DSI does not waive its rights to present its position with respect to any such order. DSI will not be required to disobey any order from a court or other judicial tribunal, including, but not limited to, notices delivered pursuant to Section 7.6 below.
2.2 | Status Reports . DSI shall provide to Depositor and Preferred Beneficiary a report profiling the account history semiannually. |
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2.3 Audit Rights. DSI agrees to keep records of the activities undertaken and materials prepared pursuant to this Agreement. Depositor and Preferred Beneficiary will be entitled at reasonable times, during normal business hours and upon reasonable notice to DSI, during the term of this Agreement to inspect the records of DSI with respect to this Agreement.
Depositor or Preferred Beneficiary will be entitled, upon reasonable notice to DSI and during normal business hours, at the facilities designated by DSI, accompanied by a designated employee of DSI, to inspect the physical status and condition of the Deposit. The Deposit may not be changed by Depositor or Preferred Beneficiary during the audit.
ARTICLE 3 RIGHT TO MAKE COPIES
3.1 Right to Make Copies . DSI shall have the right to make copies of the Deposit Materials as reasonably necessary to perform this Agreement. DSI shall copy all copyright, nondisclosure, and other proprietary notices and titles contained on the Deposit Materials onto any copies made by DSI. With all Deposit Materials submitted to DSI, Depositor shall provide any and all instructions as may be necessary to duplicate the Deposit Materials, including, but not limited to, the hardware and/or software needed. Any copying expenses incurred by DSI as a result of a request to copy will be borne by the party requesting the copies. Alternatively, DSI may notify Depositor requiring its reasonable cooperation in promptly copying the Deposit Materials in order for DSI to perform this Agreement.
ARTICLE 4 RELEASE OF DEPOSIT
4.1 Release Conditions . As used in this Agreement, Release Condition shall mean the following:
a. | Depositors failure to carry out obligations imposed on it pursuant to the License Agreement; |
b. | Depositors failure to continue to do business in the ordinary course; or |
c. | Joint written instruction from Depositor and Preferred Beneficiary. |
4.2 Filing For Release . If Preferred Beneficiary believes in good faith that a Release Condition has occurred, Preferred Beneficiary may provide to DSI written notice of the occurrence of the Release Condition and a request for the release of the Deposit Materials. Such notice shall be signed by the Preferred Beneficiary and on company letterhead. Unless DSI acknowledges or discovers independently, or through the Parties, its need for additional documentation or information in order to comply with this Section, DSI shall promptly provide a copy of the notice to Depositor by commercial express mail. Such need for additional documentation or information may extend the time period for DSIs performance under this Section.
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4.3 Contrary Instructions . From the date DSI mails the notice requesting release of the Deposit Materials, Depositor shall have ten (10) business days to deliver to DSI contrary instructions (Contrary Instructions). Contrary Instructions shall mean the written representation by Depositor that a Release Condition has not occurred or has been cured. Contrary Instructions shall be signed by Depositor and on company letterhead. Upon receipt of Contrary Instructions, DSI shall promptly send a copy to Preferred Beneficiary by commercial express mail. Additionally, DSI shall notify both Depositor and Preferred Beneficiary that there is a dispute to be resolved pursuant to Section 7.4 of this Agreement. Subject to Section 5.2 of this Agreement, DSI will continue to store the Deposit Materials without release pending (a) joint instructions from Depositor and Preferred Beneficiary; (b) dispute resolution pursuant to Section 7.4; or (c) an order from a court of competent jurisdiction.
4.4 Release of Deposit . If DSI does not receive Contrary Instructions from the Depositor, DSI is authorized to release the Deposit Materials to the Preferred Beneficiary or, if more than one beneficiary is registered to the deposit, to release a copy of the Deposit Materials to the Preferred Beneficiary. However, DSI is entitled to receive any fees due DSI before making the release. Any copying expenses will be chargeable to Preferred Beneficiary. Upon any such release, the escrow arrangement will terminate as it relates to the Depositor and Preferred Beneficiary involved in the release.
4.5 Right to Use Following Release . Unless otherwise provided in the License Agreement, upon release of the Deposit Materials in accordance with this Article 4, Preferred Beneficiary shall have the right to use the Deposit Materials for the sole purpose of continuing the benefits afforded to Preferred Beneficiary by the License Agreement. Preferred Beneficiary shall be obligated to maintain the confidentiality of the released Deposit Materials.
ARTICLE 5 TERM AND TERMINATION
5.1 Term of Agreement . The initial term of this Agreement is for a period of one (1) year. Thereafter, this Agreement shall automatically renew from year to year unless (a) Depositor and Preferred Beneficiary jointly instruct DSI in writing that the Agreement is terminated; (b) DSI instructs Depositor and Preferred Beneficiary in writing after its renewal date that the Agreement is terminated for nonpayment in accordance with Section 5.2; or (c) DSI reserves the right to terminate this Agreement, for any reason, other than for nonpayment, by providing Depositor and Preferred Beneficiary sixty (60) days written notice of its intent to terminate this Agreement. If the Acceptance Form has been signed at a date later than this Agreement, the initial term of the Acceptance Form will be for one year with subsequent terms to be adjusted to match the anniversary date of this Agreement. If the Deposit Materials are subject to another escrow agreement with DSI, DSI reserves the right, after the initial one year term, to adjust the anniversary date of this Agreement to match the then prevailing anniversary date of such other escrow arrangements.
5.2 Termination for Nonpayment . In the event of the nonpayment of fees owed to DSI, DSI shall provide written notice of delinquency to all parties to this Agreement. Any party to this Agreement affected by such delinquency shall have the right to make the payment to DSI to cure the default. If the past due payment is not received in full by DSI within one (1) month of the date of such notice, then DSI shall have the right to terminate this Agreement at any time
Page 6 of 17
thereafter to the extent it relates to the delinquent party by sending written notice of termination to all parties. DSI shall have no obligation to take any action under this Agreement so long as any payment due to DSI remains unpaid.
5.3 Disposition of Deposit Materials Upon Termination . Subject to the foregoing termination provisions, and upon termination of this Agreement, DSI shall destroy, return, or otherwise deliver the Deposit Materials in accordance with Depositors instructions. If there are no instructions, DSI may, at its sole discretion, destroy the Deposit Materials or return them to Depositor. DSI shall have no obligation to destroy or return the Deposit Materials if the Deposit Materials are subject to another escrow agreement with DSI or have been released to the Preferred Beneficiary in accordance with Section 4.4.
5.4 Survival of Terms Following Termination . Upon termination of this Agreement, the following provisions of this Agreement shall survive:
a. | The obligations of confidentiality with respect to the Deposit Materials; |
b. | The obligation to pay DSI any fees and expenses due; |
c. | The provisions of Article 7; and |
d. | Any provisions in this Agreement which specifically state they survive the termination of this Agreement. |
ARTICLE 6 DSIS FEES
6.1 Fee Schedule . DSI is entitled to be paid its standard fees and expenses applicable to the services provided. DSI shall notify the party responsible for payment of DSIs fees at least sixty (60) days prior to any increase in fees. For any service not listed on DSIs standard fee schedule, DSI will provide a quote prior to rendering the service, if requested.
6.2 Payment Terms . DSI shall not be required to perform any service, including release of any Deposit Materials under Article 4, unless the payment for such service and any outstanding balances owed to DSI are paid in full. Initial fees are due upon receipt of a signed contract or receipt of the Deposit Materials whichever is earliest. Payments on all renewal and services invoices are due net thirty (30) days from date of invoice. If invoiced fees are not paid, DSI may terminate this Agreement in accordance with Section 5.2.
ARTICLE 7 LIABILITY AND DISPUTES
7.1 Right to Rely on Instructions . DSI may act in reliance upon any instruction, instrument, or signature reasonably believed by DSI to be genuine. DSI may assume that any employee of a party to this Agreement who gives any written notice, request, or instruction has the authority to do so. DSI will not be required to inquire into the truth or evaluate the merit of any statement or representation contained in any notice or document. DSI shall not be responsible for failure to act as a result of causes beyond the reasonable control of DSI.
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7.2 Indemnification . Depositor and Preferred Beneficiary each agree to indemnify, defend and hold harmless DSI from any and all claims, actions, damages, arbitration fees and expenses, costs, attorneys fees and other liabilities (Liabilities) incurred by DSI relating in any way to this escrow arrangement except where it is adjudged that DSI acted with gross negligence or willful misconduct.
7.3 Limitation of Liability . In no event will DSI be liable for any incidental, indirect, special, exemplary, punitive or consequential damages, including, but not limited to, damages (including loss of data, revenue, and/or profits) costs or expenses (including legal fees and expenses), whether foreseeable or unforeseeable, that may arise out of or in connection with this Agreement; and in no event shall the collective liability of DSI exceed ten times the fees paid under this Agreement. The foregoing limitation of liability does not apply with respect to any acts of gross negligence, personal injury claims, property damage claims (excluding the Deposit), or intellectual property infringement.
7.4 Dispute Resolution . Any dispute relating to or arising from this Agreement shall be submitted to, and settled by arbitration by, a single arbitrator chosen by the San Diego Regional Office of the American Arbitration Association in accordance with the Commercial Rules of the American Arbitration Association. The arbitrator shall apply California law. Unless otherwise agreed by Depositor and Preferred Beneficiary, arbitration will take place in San Diego, California, U.S.A. Any court having jurisdiction over the matter may enter judgment on the award of the arbitrator. Service of a petition to confirm the arbitration award may be made by First Class mail or by commercial express mail, to the attorney for the party or, if unrepresented, to the party at the last known business address. If, however, Depositor and/or Preferred Beneficiary refuses to submit to arbitration, the matter shall not be submitted to arbitration and DSI may submit the matter to any court of competent jurisdiction for an interpleader or similar action. Unless adjudged otherwise, any costs of arbitration incurred by DSI, including reasonable attorneys fees and costs, shall be divided equally and paid by Depositor and Preferred Beneficiary.
7.5 Controlling Law . This Agreement is to be governed and construed in accordance with the laws of the State of California, without regard to its conflict of law provisions.
7.6 Notice of Requested Order . If any party intends to obtain an order from the arbitrator or any court of competent jurisdiction, which may direct DSI to take, or refrain from taking any action, that party shall:
a. | Give DSI at least five (5) business days prior notice of the hearing; |
b. | Include in any such order that, as a precondition to DSIs obligation, DSI be paid in full for any past due fees and be paid for the reasonable value of the services to be rendered pursuant to such order; and |
c. | Ensure that DSI not be required to deliver the original (as opposed to a copy) of the Deposit Materials if DSI may need to retain the original in its possession to fulfill any of its other duties. |
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ARTICLE 8 GENERAL PROVISIONS
8.1 Entire Agreement . This Agreement, which includes the Acceptance Form and Exhibits described herein, embodies the entire understanding among all of the parties with respect to its subject matter and supersedes all previous communications, representations or understandings, either oral or written. DSI is not a party to the License Agreement between Depositor and Preferred Beneficiary and has no knowledge of any of the terms or provisions of any such License Agreement. DSIs only obligations to Depositor or Preferred Beneficiary are as set forth in this Agreement. No amendment or modification of this Agreement shall be valid or binding unless signed by all the parties hereto, except that Exhibit A need not be signed by DSI, Exhibit B need not be signed by Preferred Beneficiary, Exhibit C need not be signed, Exhibit D need not be signed by Preferred Beneficiary or DSI and the Acceptance Form need only be signed by the parties identified therein.
8.2 Notices and Correspondence . All notices regarding Articles 4 and 5, and any Deposit Materials, shall be sent by commercial express or certified mail, return receipt requested. All other correspondence including invoices, payments, and other documents and communications shall be sent First Class U.S. Mail and given to the parties at the addresses specified in the attached Exhibit C and Acceptance Form. It shall be the responsibility of the parties to notify each other as provided in this Section in the event of a change of physical and e-mail addresses. The parties shall have the right to rely on the last known address of the other parties. Any correctly addressed notice or last known address of the other parties that is relied on herein that is refused, unclaimed, or undeliverable because of an act or omission of the party to be notified as provided herein shall be deemed effective as of the first date that said notice was refused, unclaimed, or deemed undeliverable by the postal authorities by mail, through messenger or commercial express delivery services.
8.3 Severability . In the event any provision of this Agreement is found to be invalid or unenforceable, the parties agree that unless it materially affects the entire intent and purpose of this Agreement, such invalidity or unenforceability shall affect neither the validity of this Agreement nor the remaining provisions herein, and the provision in question shall be deemed to be replaced with a valid and enforceable provision most closely reflecting the intent and purpose of the original provision.
8.4 Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of the parties. However, DSI shall have no obligation in performing this Agreement to recognize any successor or assign of Depositor or Preferred Beneficiary unless DSI receives clear, authoritative and conclusive written evidence of the change of parties.
8.5 Waiver . Any term of this Agreement may be waived by the party entitled to the benefits thereof, provided that any such waiver must be in writing and signed by the party against whom the enforcement of the waiver is sought. No waiver of any condition, or breach of any provision of this Agreement, in any one or more instances, shall be deemed to be a further or continuing waiver of such condition or breach. Delay or failure to exercise any right or remedy shall not be deemed the waiver of that right or remedy.
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8.6 Regulations . Depositor and Preferred Beneficiary are responsible for and warrant compliance with all applicable laws, rules and regulations, including but not limited to customs laws, import, export, and re-export laws and government regulations of any country from or to which the Deposit Materials may be delivered in accordance with the provisions of this Agreement.
8.7 Attorneys Fees. In any litigation or other proceeding by which one party either seeks to enforce its rights under this Agreement (whether in contract, tort, or both) or seeks declaration of any rights or obligations under this Agreement (whether in contract, tort, or both), the prevailing party who has proven in court by court decree, judgment or arbitrators determination that the other party has materially breached its representation and/or warranty under this Agreement shall be awarded reasonable attorneys fees, together with any costs and expenses, to resolve the dispute and to enforce final judgment.
8.8 No Third Party Rights . This Agreement is made solely for the benefit of the Parties to this Agreement and their respective permitted successors and assigns, and no other person or entity shall have or acquire any right by virtue of this Agreement unless otherwise agreed to by all the parties hereto.
8.9 Authority to Sign . Each of the Parties herein represents and warrants that the execution, delivery, and performance of this Agreement has been duly authorized and signed by a person who meets statutory or other binding approval to sign on behalf of its business organization as named in this Agreement. DSI will be able to perform its obligations under this agreement once DSI has received a fully executed agreement.
8.10 Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.
Unisys Corporation Depositor |
DSI Technology Escrow Services, Inc. |
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By: |
By: |
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Name: |
Name: |
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Title: |
Title: |
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Date: |
Date: |
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EXHIBIT A
MATERIALS TO BE DEPOSITED
Deposit Account Number
Depositor represents to Preferred Beneficiary that Deposit Materials delivered to DSI shall consist of the following:
Unisys Corporation Depositor |
Preferred Beneficiary |
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By: |
By: |
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Name: |
Name: |
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Title: |
Title: |
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Date: |
Date: |
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EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIALS
Depositor Company Name Unisys Corporation
Deposit Account Number
Product Name Version
(Product Name will appear as Exhibit B Name on Account History report)
DEPOSIT MATERIAL DESCRIPTION:
Quantity |
Media Type & Size
|
Label Description of Each Separate Item |
||
______ |
Disk 3.5 or | |||
______ |
DAT tape mm | |||
______ |
CD-ROM | |||
______ |
Data cartridge tape | |||
______ |
TK 70 or tape | |||
______ |
Magnetic tape | |||
______ |
Documentation | |||
______ |
Other |
PRODUCT DESCRIPTION:
Environment
DEPOSIT MATERIAL INFORMATION:
Is the media or are any of the files encrypted? Yes / No If yes, please include any passwords and the decryption tools.
Encryption tool name Version
Hardware required
Software required
Other required information
I certify for Depositor that the above described Deposit Materials have been transmitted to DSI: | DSI has visually inspected and accepted the above materials (any exceptions are noted above) : | |
Signature: |
Signature: |
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Print Name: |
Print Name: |
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Date: |
Date Accepted: |
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E-mail: |
Exhibit B#: |
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EXHIBIT C
DESIGNATED CONTACT
Depositor Company Number 2114129
Notices, deposit material returns and communications to Depositor should be addressed to: |
Invoices to Depositor should be addressed to: |
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Company Name: Unisys Corporation Address:
Designated Contact: Telephone: Facsimile: E-mail:
Verification
Contact:
Telephone/E-mail:
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Unisys Corporation Mail Stop E4-111 Unisys Way Blue Bell, PA 19424-0001 Contact:__Mary Kay Gould (215)-986-4375 (215)-986-5120 marykay.gould@unisys.com P.O.#, if required: |
Requests to change the designated contact should be given in writing by the designated contact or an authorized employee.
DSI has two Operations Centers to serve you. Agreements, Deposit Materials and notices to DSI should be addressed to: (select location) | All invoice fee remittances to DSI should be addressed to: |
X Attn: Client Services 9265 Sky Park Court, Suite 202 San Diego, CA 92123 Telephone: (858) 499-1600 Facsimile: (858) 694-1919 E-mail: clientservices@dsiescrow.com |
DSI Technology Escrow Services, Inc. PO Box 27131 New York, NY 10087-7131 |
|
or | ||
¨ Attn: Client Services 2100 Norcross Parkway, Suite 150 Norcross, GA 30071 Telephone: 770-239-9200 Facsimile: 770-239-9201 E-mail: clientservices@dsiescrow.com |
Date: |
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EXHIBIT D
NAME OF INITIAL MASTER PREFERRED
ESCROW ACCOUNT
Depositor Company Number
(Depositor) has entered into a Master Preferred Escrow Agreement with DSI Technology Escrow Services, Inc. (DSI). Pursuant to that Agreement, Depositor may deposit certain Deposit Materials with DSI.
The initial account will be referenced by the following name:
Deposit Account Number
Depositor |
By: |
Name: |
Title: |
Date: |
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EXHIBIT E
ADDITIONAL ESCROW ACCOUNT
TO MASTER PREFERRED ESCROW AGREEMENT
Depositor Company Number
New Deposit Account Number
(Depositor) has entered into a Master Preferred Escrow Agreement with DSI Technology Escrow Services, Inc. (DSI). Pursuant to that Agreement, Depositor may deposit certain Deposit Materials with DSI.
Depositor desires that new Deposit Materials be held in a separate account and be maintained separately from the initial account. By execution of this Exhibit E, DSI will establish a separate account for the new Deposit Materials. The new account will be referenced by the following name: .
Depositor hereby agrees that all terms and conditions of the existing Master Preferred Escrow Agreement previously entered into by Depositor and DSI will govern this account. The termination or expiration of any other account of Depositor will not affect this account.
Depositor |
DSI Technology Escrow Services, Inc. |
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By: |
By: |
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Name: |
Name: |
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Title: |
Title: |
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Date: |
Date: |
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PREFERRED BENEFICIARY
ACCEPTANCE FORM
Depositor, Preferred Beneficiary and DSI Technology Escrow Services, Inc. (DSI), hereby acknowledge that is the Preferred Beneficiary referred to in the Master Preferred Escrow Agreement effective , 20 with DSI as the escrow agent and as the Depositor. Preferred Beneficiary hereby agrees to be bound by all provisions of such Agreement.
Depositor hereby enrolls Preferred Beneficiary to the following account(s):
Account Name |
Deposit Account Number |
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|
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Notices and communications to Preferred Beneficiary should be addressed to: |
Invoices should be addressed to: |
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Company Name: Address:
Designated Contact: Telephone: E-mail: |
Contact:
P.O.#, if required:
|
Preferred Beneficiary |
Depositor |
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By: |
By: |
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Name: |
Name: |
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Title: |
Title: |
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Date: |
Date: |
DSI Technology Escrow Services, Inc.
By: |
Name: |
Title: |
Date: |
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TECHNICAL VERIFICATION OPTIONS
Level I Inventory
Objective : To provide insight into whether the necessary information required to recreate the vendors development environment has been properly stored in escrow and to detect errors that often inhibit effective use of the escrow deposit.
Steps Include: Deposit content confirmation, media functionality and virus scanning results, program content confirmation, identification of third-party libraries, potential obstructions, and recommendations for ensuring a complete deposit.
Benefit : Validates the ability to read the media in deposit (without experimenting for days to months). Identifies the tools and system needed to maintain the escrow.
Level II - Build
Objective : To compile the product and build executable code.
Steps Include : Recreating the vendors software development environment, compiling source files and modules, recreating executable code, providing a comprehensive listing of the hardware and software configurations, and creating a report detailing the steps necessary to recreate the development environment.
Benefit : Validates that the components of the technology were recreated from what was deposited. This allows for any bugs or inconsistencies to be corrected.
Optional Level II Service : DSI provides the executables created during Level II testing to the beneficiary for functionality testing. This requires the depositors approval.
Level III - Validation
Objective : To test the functionality of the compiled deposit materials.
Steps Include : The objective of a Level III Verification can be accomplished through one of the following two options:
| Option A - The beneficiary provides DSI with a copy of its licensed executables. DSI compares the executables created during Level II testing with the licensed executables and provides a comparison report to all parties. |
| Option B - DSI recreates the runtime environment for the licensed technology and installs the executables created during the Level II testing into that environment. (The environment is generally scaled down from the actual live environment.) DSI then runs test scripts supplied by the beneficiary and provides a report of the test results to all parties. |
Benefit : Confirms that the build executables match expectations.
For additional information about DSI Technical Verification Services, please contact
a verification specialist at (800) 962-0652 or by e-mail at verification@dsiescrow.com .
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EXHIBIT 15
LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION
May 7, 2004
UnitedHealth Group Incorporated
We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of UnitedHealth Group Incorporated and Subsidiaries for the period ended March 31, 2004, as indicated in our report dated April 30, 2004; because we did not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, is incorporated by reference in Registration Statement File Nos. 333-66013, 33-22310, 33-50282, 33-59083, 33-59623, 33-63885, 33-67918, 33-68300, 33-75846, 333-02525, 333-04875, 333-25923, 333-44613, 333-45289, 333-50461, 333-66013, 333-71007, 333-81337, 333-87243, 333-88506, 333-90247, 333-46284, 333-55666, 333-100027, 333-105875, 333-105877, 333-110356 and 333-113755.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ D ELOITTE & T OUCHE LLP
Minneapolis, Minnesota
Exhibit 31
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Certification of Principal Executive Officer
I, William W. McGuire, M.D., Chairman and Chief Executive Officer of UnitedHealth Group Incorporated, certify that:
1. I have reviewed this quarterly report on Form 10-Q of UnitedHealth Group Incorporated (the registrant);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: May 7, 2004
/ S / W ILLIAM W. M C G UIRE , MD |
|
William W. McGuire, M.D. Chairman and Chief Executive Officer |
Certification of Principal Financial Officer
I, Patrick J. Erlandson, Chief Financial Officer of UnitedHealth Group Incorporated, certify that:
1. I have reviewed this quarterly report on Form 10-Q of UnitedHealth Group Incorporated (the registrant);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: May 7, 2004
/ S / P ATRICK J. E RLANDSON |
|
Patrick J. Erlandson Chief Financial Officer |
EXHIBIT 32
CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of UnitedHealth Group Incorporated (the Company) on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, William W. McGuire, M.D., Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ W ILLIAM W. M C G UIRE , M.D. |
William W. McGuire, M.D. |
Chairman and Chief Executive Officer |
May 7, 2004 |
In connection with the Quarterly Report of UnitedHealth Group Incorporated (the Company) on Form 10-Q for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Patrick J. Erlandson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ P ATRICK J. E RLANDSON |
Patrick J. Erlandson |
Chief Financial Officer |
May 7, 2004 |